Disposal of assets answers the following questions.

1. A company has an inventory of 1,000 assorted parts for a line of missiles that has been discontinued. The inventory cost is $75,000. The parts can be either (a) re-machined at total additional costs $25,000 and then sold for $30,000 or (b) sold as scrap for $3,000. Which action is more profitable? Show your calculations.

2. A truck, costing $100,000 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $15,000 cash and replaced with a similar truck costing $105,000 or (b) rebuilt for $85,000, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly Show your calculations.