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Unformatted text preview: through acquisition of fixed assets. A growing
firm often needs to acquire new fixed assets rapidly, as in the purchase
of property and plant facilities. Replacement As a firm’s growth slows and it reaches maturity, most capital expenditures will be made to replace or renew obsolete or worn-out assets. Each
time a machine requires a major repair, the outlay for the repair should
be compared to the outlay to replace the machine and the benefits of
replacement. Renewal Renewal, an alternative to replacement, may involve rebuilding, overhauling, or retrofitting an existing fixed asset. For example, an existing
drill press could be renewed by replacing its motor and adding a numeric
control system, or a physical facility could be renewed by rewiring and
adding air conditioning. To improve efficiency, both replacement and
renewal of existing machinery may be suitable solutions. Other purposes Some capital expenditures do not result in the acquisition or transformation of tangible fixed assets. Instead, they involve a long-term commitment of funds i...
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This document was uploaded on 01/19/2014.
- Fall '13