Questions on Disposal of Assets 1. A company has an inventory of 1,000 assorted missile parts for a line of missiles that has been junked. The inventory cost $100,000. The parts can be either

(a) remachined at total additional costs of $30,000 and then sold for a total of $35,000, or

(b) scrapped for $2,000. What should be done?

2. A truck, costing $10,000 and uninsured, is wrecked the first day in use. It can be either

(a) disposed of for $1,000 cash and replaced with a similar truck costing $10,200, or

(b) rebuilt for $8,500 and be brand-new as far as operating characteristics and looks are concerned. What should be done? lop5