(Answered) Question - certain production equipment used in flatburgs

Accounting

Question - Certain Production equipment used in Flatburg's Canadian plant has become obsolete relative to current technology. The company is considering whether it should keep its existing equipment or purchase new equipment. To aid in this decision, the company's controller gathered the following data:

Old Equip New Equip original cost $72,000 $99,000

remaining life 5 years 5 years

Accumulated Depreciation $39,500 $0

Annual Cash Operating Cost $17,000 $4,000

Residual Value $25,000 N/A

Prepare analysis report on the proposal to keep or replace the equipment & state your decision.

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