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Food Process Ltd. purchased a machine for $100,000. Current accumulated amortization totals $40,000. Management is contemplating the purchase of a new machine for $120,000. Current
Food Process Ltd. purchased a machine for $100,000. Current accumulated amortization totals $40,000. Management is contemplating the purchase of a new machine for $120,000. Current disposal of the old machine would cost $65,000. What is the correct category for each item? A. Irrelevant: $100,000 cost of old machine, $40,000 accumulated amortization Relevant: $120,000 cost of new machine, $5,000 gain on sale, $65,000 disposal of old machine B. Irrelevant: $100,000 cost of old machine, $60,000 book value of old machine Relevant: $120,000 cost of new machine, $65,000 disposal of old machine, $5,000 gain on sale C. Irrelevant: $120,000 of new machine, $40,000 accumulated amortization Relevant: $100,000 cost of old machine, $65,000 of disposal of old machine, $5,000 gain on sale D. Irrelevant: $120,000 cost of new machine, $65,000 disposal of old machine Relevant: $100,000 cost of old machine, $60,000 book value of old machine, $5,000 gain on sale E. Irrelevant: $100,000 cost of old machine, $40,000 accumulated amortization, $5,000 gain on sale Relevant: $120,000 cost of new machine, $65,000 disposal of old machine
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