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Bruno purchased some equipment several years ago for $50,000. Its net book value is now $10,000. The equipment is no longer in normal use and it could be sold now for $8,000.
Bruno has been offered a one-off contract which would make use of this piece of equipment for six months. After this time the equipment would be sold for $5,000.
What is the relevant cost of the equipment to the contract?
A. $8,000
B. $3,000
C. $5,000
D. $10,000
the answer for the following is A, however according to my knowledge I believe it should have been B, 8000-5000 = 3000 because it represents the loss in the resale value if the contract Is to be done. please explain why I am wrong.
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