cure https//edugen wileyplus.com/edugen/lti/main.uni Q Kimmel, Accounting, 6e CA
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cure https//edugen wileyplus.com/edugen/lti/main.uni Q Kimmel, Accounting, 6e CALCULATOR PRINTER VERSIONBACK NEX Problem 20-4A (Part Level Submission) Last year (2016), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company's accountant to provide him with cost data on the company's elevator. This information is presented below Old Elevator New Elevator 104,000$160,000 Purchase price Estimated salvage value Estimated useful life Depreciation method S years 4 years Straight Straight-line tudy uxAual operating costs other than depreciation 434,400 22,800 Variable $11,000 ,800 Fixed Annual revenues are $240,000, and selling and administrative expenses are $28,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017, Richter Condos will be able to sell it for $24,300. (a) Your answer is partially correct. Try again. Determine any gain or loss if the old elevator is replaced Click if you would like to Show Work for this question: Open Show Work Attempts: 3 of 3 used (b) Prepare a 4-year summarized income statement for each of the following assumptions: (2) The old elevator is retained. Retain Old Elevator Less costs Vanable costsExplanation / Answer
(a)
Calculation of Annual Depreciation for both elevator
Old Elevator = (104000 - 0) / 5 = $20800
New Elevator = (160000 - 0) / 4 = $40000
Calculation of Profit/Loss on sale of old elevator at the beginning of year 2017
Book value of old elevator = $(104000 - 20800) = $83200
Less: Selling Price = $24300
Loss on sale = $58900
If Old Elevator retained the net income will be = $536000
If old elevator is replaced the net income will be =$549900
Net Gain if elevator is replaced = $13900
(b) 4 year summarized Income Statement
1. If The old elevator is retained:
2. If old elevator is replaced
Revenue 240000 x 4 960'000 Less: Costs Variable Costs 34400 x 4 137600 Fixed Costs 22800 x 4 91200 Selling & Admin Cost 28000 x 4 112000 Depreciation 20800 x 4 83200 (424000) Net Income 536000Related Questions
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