ACCOUNTING
Multiple Choice
Flowers For Everyone is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow:
Existing van New van
Original cost $100,000 $180,000
Annual operating cost $ 35,000 $ 20,000
Accumulated depreciation $ 60,000 ---
Current salvage value of the existing van $ 45,000 ---
Remaining life 10 years 10 years
Salvage value in 10 years $ 0 $ 0
Annual depreciation $ 4,000 $ 18,000
Relevant costs for this decision include
a. the original cost of the existing van.
b. accumulated depreciation.
c. the current salvage value.
d. the salvage value in 10 years.
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