Practice questions:

Sooky has a spotter truck with a book value of $43,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero-salvage value. iSooky can purchase a new spotter truck for $123,000 and receive $31,300 in return for trading in its old spotter truck. The old spotter truck has variable manufacturing costs of $78,000 per year. The new spotter truck will reduce variable manufacturing costs by $25,300 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck is: a. \$31,300 decrease b. $31,300 increase C. $34,800 decrease d. $123,000 decrease e. $34,800 increase