Asked by Angela Pantoja on Jun 11, 2024
Verified
It is better not to replace old equipment if it is not fully depreciated.
Fully Depreciated
A status of an asset whose entire cost has been expensed with respect to depreciation, leaving its book value at zero except for salvage value, if any.
- Distinguish between relevant and sunk costs in decision-making scenarios.
Verified Answer
CB
Camille BlackJun 15, 2024
Final Answer :
False
Explanation :
The decision to replace old equipment should be based on its efficiency, maintenance costs, and how well it meets current needs, not solely on its depreciation status. Fully depreciated equipment can still be costly if it's inefficient or frequently needs repairs.
Learning Objectives
- Distinguish between relevant and sunk costs in decision-making scenarios.