Jabo Inc. is considering a new bifro-spectra machine for its production plant to replace an old machine
Question:
Jabo Inc. is considering a new bifro-spectra machine for its production plant to replace an old machine that originally cost \($12,000\) and has \($9,000\) of accumulated depreciation. The new machine can be purchased at a cash cost of \($18,000\), but the distributor of the new machine has offered to take the old machine in as a trade-in, thereby reducing the cost of the new machine to \($16,000\). Based only on this information, calculate the total relevant cost of acquiring the new machine.
a. \($16,000\), or the net cash paid to the distributor
b. \($18,000\), or the gross cost of the new machine
c. \($19,000\), or the net cash paid plus the book value ($3,000) of the old machine
d. \($17,000\), or the gross cost of the new machine minus the \($1,000\) loss on disposing of the old machine
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