2.2 - Dr. James Douglas Guidelines for Replacement
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Practice Questions
Test your understanding with targeted questions
What is depreciation?
💡 Hint: It pertains to the worth of machines as they age.
How do you calculate the first year’s depreciation for a machine costing 28 lakh at a rate of 0.4?
💡 Hint: Think of it as a percentage of the cost.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the first step in determining the replacement timing of machinery?
💡 Hint: Think about value loss.
True or False: The minimum cost method suggests replacing equipment when future costs exceed cumulative costs of the new machine.
💡 Hint: Focus on cost comparisons.
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Challenge Problems
Push your limits with advanced challenges
If a loader depreciates at a steady rate and becomes less productive each year, calculate the depreciation over 5 years. If its original price was 30 lakh, how would you expect to see its value after each year?
💡 Hint: Track the yearly decrease using cumulative depreciation.
Given a new machine's minimum average annual cumulative cost is 16 lakh, and the current machine is projected to cost 18 lakh next year, is it time to consider replacement? Discuss the implications.
💡 Hint: Consider the cost-benefit balance in machine longevity.
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Reference links
Supplementary resources to enhance your learning experience.
- Understanding Depreciation with Examples
- Equipment Replacement Strategies
- Machinery Maintenance and Operating Costs
- Introduction to Minimum Cost Method
- Economic Life of Machinery Explained
- Depreciation Methods Overview
- YouTube - Equipment Management Strategies
- YouTube - How to Analyze Depreciation and Replacement Costs