Asked by Cassandra Randall on May 07, 2024
Verified
In a decision to retain or replace old equipment the salvage value of the old equipment is relevant in incremental analysis.
Salvage Value
An estimate of an asset’s value at the end of its useful life.
Incremental Analysis
The process of identifying the financial data that change under alternative courses of action.
- Identify the differences between applicable costs and expenses that have already been incurred and cannot be recovered in decision making contexts.
Verified Answer
AS
Ahmad SobohMay 09, 2024
Final Answer :
True
Explanation :
Salvage value is the amount of money that can be obtained from selling or disposing of old equipment. This value is relevant in incremental analysis because it represents cash flow that will be received if the old equipment is replaced.
Learning Objectives
- Identify the differences between applicable costs and expenses that have already been incurred and cannot be recovered in decision making contexts.