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Ace limited is considering a new project that will require the use of a currently idle machine. The machine has a current book value of $12000 and a potential disposal value of $10500 (before $200 disposal costs) and hence has been under depreciated by $1500 over its life to date. If the machine is to be fit for purpose on the new project it will have to be relocated at a cost of $500 and refitted at a further cost of $800.
What is the relevant cost of using the machine on the new project?
Please don’t simply set me test questions and expect an answer! You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will help you.
The relevant cost o fusing the machine on the new project is 11,600
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