asagnmern untsitakoAssig gmentsessinnl gment take Differential Analysis for a Le

Question

asagnmern untsitakoAssig gmentsessinnl gment take Differential Analysis for a Lease or Sell Decision Sure Bilt Construct depreciation of $120,600) for S276, 700, less a 5% brokerage commission. Alternatvey, years, after which it is expected to have no residusal valae. Durng the period of the lease, Sure-Bilt Canstruction Company's costs of repairs Company is corsidering selling excess machinery with a book value of $277,200 (original cost of $398,300 less acoumulated the machinery can be leased for a total of $286,800 for five and property tax expenses are expected to be $25,400 Hintis) a. Prepare a differential analysis, dated Jaruary 3, 2014, to determine whether Sure-Bilt should lease (Alternati machinery ve 1) or sell (Alternative 2) the Diffurential Analysis Leasa Machinery [Alt. 1) or Sell Machlnury (Alt.2) January 3, 2014 ery [Alternative 1 Sell Machnery (ternative 21 Differential Effect on Income(Alternative 2) 262065 -23935 Revenues -25400 Costs Income ILoss) 261400 262865

Explanation / Answer

- Revenues under Alternative 2 (i.e. Sell Machinery) should be $276,700.

- Costs will be $13,835 (5% Selling Commission on $276,700).

- Consequently, Differential Effect on Income will be $1,465. (Differential Income $10,100 - Differential Cost $11,565).

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.