Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Thornton Moran manages the cutting department of Greene Vernon Company. He purchased a tree-cutting machine on January 1, year 2. for $510,000 The machine had
Thornton Moran manages the cutting department of Greene Vernon Company. He purchased a tree-cutting machine on January 1, year 2. for $510,000 The machine had an estimated useful life of 5 years and zero salvage value and the cost to operate it is $101.000 per year Technological developments resulted in the development of a more advanced machine available for purchase on January 1 year 3, that would allow a 30 percent reduction in operating costs The new machine would cost $350,000 and have a 4 year useful life and zero salvage value. The current market value of the old machine on January 1 year 3, is $270,000 and its book value is $408.000 on that date Straight-line depreciation is used for both machines. The company expects to generate $230,000 of revenue per year from the use of either machine Required a. Recommend whether to replace the old machine on January 1 year 3 b. Prepare income statements for four years (year 3 through year 6) assuming that the old machine is retained c. Prepare income statements for four years (year 3 through year 6) assuming that the old machine is replaced Complete this question by entering your answers in the tabs below. Required A Required B Required Recommend whether to replace the old machine on January 1, year 3: Replace With New Decision Keep Old Total avoidable costs Should the old machine be replaced on January 1, your 32 KRA Required B Thornton Moron manages the cutting department of Greene Vernon Company He purchased a tree cutting machine on January 1 year 2, for $510,000 The machine had an estimated useful life of 5 years and zero salvage volue, and the cost to operate it is $101000 per year. Technological developments resulted in the development of a more advanced machine available for purchase on January 1 year 3, that would allow a 30 percent reduction in operating costs. The new machine would cost $350,000 and have a 4 year useful life and zero salvage value. The current market value of the old machine on January 1 year 3, is $270,000, and its book value is $408.000 on that date. Straight line depreciation is used for both machines. The company expects to generate $230,000 of revenue per year from the use of either machine Required o. Recommend whether to replace the old machine on January 1 year 3 b. Prepare income statements for four years (year 3 through year 6) assuming that the old machine is retained c. Prepare income statements for four years (Year 3 through year 6) assuming that the old machine is replaced Complete this question by entering your answers in the tabs below. Required A Required Required Prepare income statements for four years (year 3 through year 6) assuming that the old machine is retained. Year 3 Year 4 Years Year Total Revenu Deprecaton exporro Operating expense Not income foss) Thornton Moran manages the cutting department of Greene Vernon Company. He purchased a tree cutting machine on January 1 year 2 for $510,000. The machine had an estimated useful life of 5 years and zero salvage value and the cost to operate it is $101.000 per year Technological developments resulted in the development of a more advanced machine available for purchase on January 1, year 3. that would allow a 30 percent reduction in operating costs. The new machine would cost $350,000 and have a 4-year useful life and zero salvage volue. The current market value of the old machine on January 1 year 3, is $270,000, and its book value is $408,000 on that date Straight-line depreciation is used for both machines. The company expects to generate $230,000 of revenue per year from the use of either machine. Required a. Recommend whether to replace the old machine on January 1 year 3. b. Prepare income statements for four years (year 3 through year 6) assuming that the old machine is retained c. Prepare income statements for four years fyear 3 through year 6) assuming that the old machine is replaced. Complete this question by entering your answers in the tabs below. Required Required Required Prepare income statements for four years (year 3 through your assuming tht the old machine is replaced Year 3 Year 4 Year 5 Year Total Rover Depreciation expenso Operating expense Loss on disposal Not income (oss)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started