Business, 03.03.2020 00:01 finlchey3860
Johnson and Johnson Company is considering a new drilling machine for its production plant to replace an old drilling machine that originally cost $10,000 and has $7,000 of accumulated depreciation.
The new machine can be purchased at a cash cost of $16,000, but the distributor of the new drilling machine has offered to take the old machine in as a trade-in, thereby reducing the cost of the new machine to $14,000.
Based only on this information, calculate the total relevant cost of acquiring the new machine.
A.$16,000, or the gross cost of the new machine minus the $1,000 loss on disposing of the old machine
B.$14,000, or the net cash paid to the distributor
C.$14,000, or the net cash paid plus the book value ($3,000) of the old machine
D.$16,000, or the gross cost of the new machine
Answers: 2
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Johnson and Johnson Company is considering a new drilling machine for its production plant to replac...
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