Question

If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. What is the net cost of the new equipment? g

Answer 1

$315,000

Step-by-step explanation:

The below is missing from the question, hence, my solution would be based on the original question and additional details below:

Old Equipment New Equipment

Purchase price $225,000 $375,000

Accumulated depreciation $90,000 - 0 -

Annual operating costs $300,000 $240,000

The net cost of the equipment is the actual expenditure to the firm by acquiring the new equipment which is the cost of new equipment minus the amount receivable from selling the old equipment

net cost of new equipment=$375,000-$60,000

net cost of new equipment=$315,000