Book value of existing equipment is a historical cost and not necessary for deciding equipment replacement, thus it can be considered as

A. operating cost

B. sunk cost

C. in-house cost

D. out-house cost

Answer: Option B

Solution(By Examveda Team)

Book value of existing equipment is a historical cost and not necessary for deciding equipment replacement, thus it can be considered as sunk cost. A sunk cost is a cost that an entity has incurred, and which it can no longer recover.