Ridley Company has a factory machine with a book
value of $88,600 and a remaining useful life of 4 years. A new machine
is available at a cost of $213,400. This machine will have a 4-year
useful life with no salvage value. The new machine will lower annual
variable manufacturing costs from $554,000 to $423,600.
Prepare an analysis showing whether the old machine should be retained or replaced. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
Retain Replace Net 6 Year
Equipment Equipment I ncome
Increase
(Decrease)
Prepare an analysis showing whether the old machine should be retained or replaced. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
Retain Replace Net 6 Year
Equipment Equipment I ncome
Increase
(Decrease)
