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Prepare incremental analysis for decision to retain

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Reference no: EM132638347

The law firm of Matadin and Howe relies heavily on a colour laser printer to process the paperwork. Recently the printer has not functioned well and print jobs were not being processed. Management is considering updating the printer with a faster model.

Question 1: Prepare incremental analysis for decision to retain or replace equipment.

Current Printer New Model

Original purchase cost Accumulated depreciation Estimated operating costs (annual) Useful life

$30,000     17,000         3,000                         4 years
$24,000        -                 2,000                    4 years

  • If sold now, the current printer would have a salvage value of $4,000. If operated for the remainder of its useful life, the current printer would have zero salvage value. The new printer is expected to have zero salvage value after four years.

 

Reference no: EM132638347

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