- This topic has 1 reply, 2 voices, and was last updated 10 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
A company has just purchased a new machine, costing 150,000, for a contract. It has an installation cost of 25,000 and is expected to have a scrap value of 10,000 in five years time. The machine will be depreciated on a straight line basis over five years.
What is the relevant cost of the machine for the contract?
Relevant costing as a separate topic is no longer examinable at F2 (only at F5).
The above can only be asked in the context of investment appraisal (capital budgeting), where you need to decide on the relevant cash flows.
(Even in that context, the question as you have typed it could not be asked because more information is needed.)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.