Electrical Engineering Equipment Ltd

Multiple Choice

Electrical Engineering Equipment Ltd. purchased a machine for $100,000; current accumulated amortization totals $40,000. Management is contemplating the purchase of a new machine for $120,000. Current disposal of the old machine would cost $65,000.
What is the correct category for each item?

A) Irrelevant: $120,000 of new machine, $40,000 accumulated amortization;
Relevant: $100,000 cost of old machine, $65,000 of disposal of old machine, $5,000 gain on sale
B) Irrelevant: $100,000 cost of old machine, $40,000 accumulated amortization;
Relevant: $120,000 cost of new machine, $5,000 gain on sale, $65,000 disposal of old machine
C) Irrelevant: $120,000 cost of new machine, $65,000 disposal of old machine;
Relevant: $100,000 cost of old machine, $60,000 book value of old machine, $5,000 gain on sale
D) Irrelevant: $100,000 cost of old machine, $60,000 book value of old machine;
Relevant: $120,000 cost of new machine, $65,000 disposal of old machine, $5,000 gain on sale
E) Irrelevant: $100,000 cost of old machine, $40,000 accumulated amortization, $5,000 gain on sale; Relevant: $120,000 cost of new machine, $65,000 disposal of old machine