Asked by
Jasmine Wilkinson
on Dec 16, 2024Verified
Delaney Company is considering replacing equipment that originally cost $600,000 and that has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation?
A) $370,000
B) $790,000
C) $180,000
D) $190,000
Sunk Cost
A sunk cost refers to money that has already been spent and cannot be recovered, often considered when making financial decisions about future investments.
Accumulated Depreciation
The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired.
- Identify the concepts of sunk cost, differential cost, and opportunity cost in decision-making processes.
Verified Answer
TS
Learning Objectives
- Identify the concepts of sunk cost, differential cost, and opportunity cost in decision-making processes.