Question
Consider the following data concerning Copy Cat Photocopying Limited Old equipment Proposed replacement equipment Useful life in years 5 3 Current age in years 2
Consider the following data concerning Copy Cat Photocopying Limited
Old equipment Proposed replacement
equipment
Useful life in years 5 3
Current age in years 2 0
Original cost Shs25,000 Shs15,000
Accumulated depreciation 10,000 0
Book Value 15,000 Not acquired yet
Disposal value(in cash ) now 7,000 Not acquired yet
Disposal value in 3 years 0 0
Annual cash operating costs for
power, maintenance, toner etc14,0008,000
Copy cat is trying to decide whether to replace the old equipment. Because of the rapid
changes in technology, copy cat expect the replacement equipment to have a 3year useful
life only. Ignore the effects of taxes 20mks
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Cambridge IGCSE And O Level Accounting Coursebook
Authors: Catherine Coucom
2nd Edition
1316502775, 978-1316502778
