Granfield Company has a piece of manufacturing equipment with a book value of $48,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero-salvage value. Granfield can purchase new equipment for $171,000 and receive $28,800 in return for trading in its current equipment. The current equipment has variable manufacturing costs of $56,000 per year. The new equipment will reduce variable manufacturing costs by $27,500 per year over its four-year life. The total increase or decrease in income by replacing the current equipment with the new equipment is: Multiple Choice $32,200 increase $110,000 increase $16,300 decrease $74,950 increase $32,200 decrease

Granfield Company has a piece of manufacturing equipment with a book value of $48,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero-salvage value. Granfield can purchase new equipment for $171,000 and receive $28,800 in return for trading in its current equipment. The current equipment has variable manufacturing costs of $56,000 per year. The new equipment will reduce variable manufacturing costs by $27,500 per year over its four-year life. The total increase or decrease in income by replacing the current equipment with the new equipment is: Multiple Choice $32,200 increase $110,000 increase $16,300 decrease $74,950 increase $32,200 decrease

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 8Q

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