Smith Industries is considering replacing a machine that is presently used in its production process
Which of the following is irrelevant to the replacement decision?
Old Machine Replacement
Machine
Original cost $70,000 $45,000
Remaining useful life in years 5 5
Current age in years 5 0
Book value $33,000
Current disposal value in cash $10,000
Future disposal value in cash (in 5 years) $0 $0
Annual cash operating costs $7,000 $4,000
Which of the information provided in the table is irrelevant to the replacement decision?
A) the sales price of the new machine
B) the original cost of the old machine
C) the current disposal value of the old machine
D) the annual cash operating costs
B
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