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rom Cengage Learning-Google Chrome ignmentMain.do?invoker-assignments&itakeAssignmentSessionl.ocator-assignment-take;& Calculator Keating Co. is considering disposing of equipment with a cost of S80,000 and accumulated depreason of SS00·lating ca ass equipment through a broker for $30,000 less 10% commission. Alternatively, Gunner Co. has ofered ta lease the eauonent-f total of $49,000. Keating will incur repair, insurance, and property tax expenses est equipment is expected to have no residual value. The net differential income from the lease alternative i over the five-year period. At lease-end, the $8,400 $14,400 $18,000 O$12,000

Explanation / Answer

CALCULATION OF DIFFERENTIAL INCOME OF SALE AND LEASE THE EQUIPMENT Sell through Broker Lease the Equipment Revenue $               30,000 $               49,000 Less: Expenses and Commission Commission on Sales 10% $                 3,000 $                        -   Repair, Insurance and property Taxes $                        -   $               10,000 Net Income $               27,000 $               39,000 Differential Income ($ 39,000 - $ 27,000) = $               12,000 Answer = Option 4 = $ 12,000

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