The carrying value of the old asset in a machine replacement decision is irrelevant.

Question

Quizplus · Accepted Answer

The carrying value of the old asset is irrelevant in a machine replacement decision because the decision should be based on the future cash flows and costs associated with the new machine versus the old machine. The carrying value simply reflects the historical cost of the asset and any accumulated depreciation, and does not reflect the current market value or potential future benefits of the asset.

The Carrying Value of the Old Asset in a Machine