Weygandt, Financial & Hanagerial Accounting, 2e Help I System CES Problem 21-4A

Question

Weygandt, Financial & Hanagerial Accounting, 2e Help I System CES Problem 21-4A (Part Level Submission) Last year (2016), Richter Condos installed a mechanized elevator for its tenants. The owner of the company. Ron richte, receney industry equipment exhbtion where he watched a puterized ele ator denntnted-was-gmted-t, nide, and cost efficiency. Upon returning from the exhibition, he asked his purchesing agent to collect price and epers elevator. In addition, he asked the company's accountant to provide him with cost data on the company's elevator. This retuned from an with the elevator's speed, comlort ef information is presened operating cost data on the Old Elevator $103,000 Purchase price Estimated salvage value Estimated useful lide Depreciation method Annual operating costs Elevator 159,000 4years other than depreciation: $10,000 8,600 Fixed 23,300 expenses are $30,000, ragardless of wtich levetor used t th ld eevator Annual revenues are $240,000, and seling and administrative replaced now, at the beginning of 2017, Richter Condos wit be able to sel it for $24,300 (a) Determine eny gar, or r the old elevator is replaced. Attempts: 0 of 3 used st roesers

Explanation / Answer

21-4.

There will be an increase of $21,350 in annual net income if the old machine is replaced.

For the first year there will be a overal loss of $36,750 if the machine is replaced, as shown below.

21-10.

(a)

Net value (after one year) * 82400 Sale value of the old machine 24300 Loss on sale of old machine 58100 Less: savings from the new nachine -21350 Loss to be reoprted in the first year 36750 From the second year onwards there will a saving of $21,350 in expenses for the next three years.

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