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Inman Construction Company is considering selling excess machinery with a book value of $280,000 (original cost of $400,000 less accumulated depreciation of $120,000) for $292,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $312,000 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $36,000.

a. Prepare a differential analysis report, dated January 3, 2010, for the lease or sell decision. Enter all amounts as positive numbers.

Proposal to Lease or Sell Machinery
January 3, 2010
Differential revenue from alternatives:
Revenue from lease
Proceeds from sale
Differential revenue from lease
Differential cost of alternatives:
Repairs, insurance, and property tax expenses from lease
Commission on sale
Differential cost of lease
Net differential from lease alternative

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