Answer the following question(s) using the information below.
Central Medical Supply Inc., a manufacturer of medical testing equipment, has $240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $64,000; the market value would then be $136,000. However, Tripac offered to purchase the obsolete equipment as is for $88,000.
-Central Medical Supply Inc., a manufacturer of medical testing equipment, has $240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $64,000; the market value would then be $136,000. However, Tripac offered to purchase the obsolete equipment as is for $88,000.
What are the relevant figures above for management in their decision?
A) ($240,000 + $64,000); ($88,000 - 0)
B) ($240,000 + $64,000); ($88,000 - 240,000)
C) ($240,000 + $64,000); ($88,000 + 240,000)
D) ($136,000 - $64,000); ($88,000 - 0)
E) ($136,000 - $64,000); ($88,000 - 240,000)

Question

Quizplus · Accepted Answer

The relevant figures are the net gain from adapting the equipment ($136,000 market value - $64,000 adaptation cost) and the net gain from selling the equipment as is ($88,000 sale price - $0 adaptation cost).

Answer the Following Question(s) Using the Information Below