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This video tutorial focuses on incremental analysis for deciding whether to retain or replace equipment. It emphasizes the comparison of costs influenced by both alternatives, particularly variable manufacturing costs and the cost of new equipment. The book value of the existing equipment is identified as a sunk cost, which does not influence current or future decisions. Sunk costs are costs that cannot be altered by present choices. The book value is defined as the equipment's cost minus accumulated depreciation. If the equipment is disposed of without receiving trade-in value, the book value results in a loss on the income statement. Overall, both scenarios affect the income statement similarly.