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Granfield Company has a piece of manufacturing equipment with a book value of $45.000 and a remaining useful life of four years. At the end
Granfield Company has a piece of manufacturing equipment with a book value of $45.000 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $23,000. Granfield can purchase a new machine for $130,000 and receive $23,000 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $20.000 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is: Multiple Choice O $22.000 decrease O $27,000 Increase o o O $55.500 Increase O $27.000 decrease O $80.000 decrease
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