HaroldsCompany is a small privately-owned print shop.They're a self-serve print and copy shop that has all the necessary equipment, paper, and related supplies for use by entrepreneurs, small business owners, students, and others that work from home and need access to office equipment and supplies on demand.

Presently, the company is considering a proposal for replacing several of their do-it-yourself copiers (the "old copiers") for newer copiers.

The estimated total cost to purchase newer copiers is $60,000.Because these newer copiers will be more efficient and of a higher quality than their old copiers, if Copy-It purchases the new copiers, they estimate they will incur reduced operating cost.The estimated operating cost of the newer copiers is $20,000 (excluding depreciation), which is a significant reduction from their current $60,000 operating cost for their old copiers.In addition, they believe the new copiers will have a productive useful life of 6 years and, at the end of that period they expect to sell the copiers for $56,000.

Currently, Copy-It's old copiers, in total, are recorded on their books at a net cost, or book value, of $20,000. The company estimates that these copiers have a remaining life of 4 years with estimated salvage value of $2,000 at that time.However, if they accept the proposal to buy new copiers today, they will be able to sell these old copiers for about $5,500. Estimated disposal costs are minimal and can be ignored for this decision.

The company records annual depreciation for the old copiers of $3,000.

Required

1. Prepare a schedule comparing the current costs associated with the "old copiers" to the estimated costs of the newer copiers that might replace the old copiers.
2. Prepare a schedule showing the accounting gain or loss the company will incur if they dispose of the old copiers.For this, ignore the proposal to acquire new copiers.
3. Using a relevant cost approach, analyze the proposal and give management a recommendation of accepting or rejecting the proposal to replace the old copiers with the new copiers.
4. Assuming the company decides to replace their existing copiers, what qualitative, i.e. non-financial/economic factors, should management consider before disposing of the old copiers and acquiring the new ones?