Asked by Alyssa Squissato on Jun 27, 2024
Verified
It may be a good decision to replace an asset before its original cost has been fully recovered through increased revenues or decreased costs.
Asset
Resources owned or controlled by a business that are expected to provide future economic benefits.
Original Cost
The initial price paid or cost of acquisition of an asset, before any depreciation, amortization, or impairment costs are deducted.
Increased Revenues
A rise in the amount of money a company earns from its business activities over a certain period.
- Separate relevant from irrelevant expenditures when engaged in the process of making decisions.
- Acquire knowledge on how opportunity costs influence choices.
Verified Answer
WY
Wasanan YoowongJun 27, 2024
Final Answer :
True
Explanation :
This decision should be based on factors such as maintenance costs, technological advances, and efficiency. If the cost savings from a newer asset outweigh the remaining value of the older asset, it may be a good decision to replace it even if the original cost has not been fully recovered.
Learning Objectives
- Separate relevant from irrelevant expenditures when engaged in the process of making decisions.
- Acquire knowledge on how opportunity costs influence choices.
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