Assume that Peak Co. Is considering disposing of equipment that cost... Please need answer the general accounting question Assume that Peak Co. is considering disposing of equipmentthat cost $85,000.00 and has $59,500.00 of accumulateddepreciation to date. Peak Co. can sell the equipment through abroker for $35,000.00 less 6% commission. Alternatively, ValleyCo. has offered to lease the equipment for five years for a totalof $55,000.00. Peak will incur repair, insurance, and property taxexpenses estimated at $11,000.00. At lease end, the equipmentis expected to have no residual value. Determine the netdifferential income from the lease alternative.a. $32,900.00b. $55,000.00c. $11,100.00d. $44,000.00

Step 1: Define Differential IncomeDifferential income is the difference in income between two…

Answered: Assume that Peak Co. is considering…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 44P

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Assume that Win Co. is considering disposing of equipment that cost $74,582.00 and has $52,207.40 of accumulated depreciation to date. Win Co. can sell the equipment through a broker for $30,681.00 less 5% commission. Alternatively, But Co. has offered to lease the equipment for five years for a total of $48,245.00. Win will incur repair, insurance, and property tax expenses estimated at $9,671.00. At lease end, the equipment is expected to have no residual value. Determine the net differential income from the lease alternative. a. $29,146.95 b. $48,245.00 c. $9,427.05 d. $16,199.40
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Duncan Company owns a machine with a cost of $308,440 and accumulated depreciation of $63,270 that can be sold for $264,500 less a 6% sales commission. Alternatively, Duncan Company can lease the machine to another company for three years for a total of $276,490, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Duncan Company on the machine would total $24,440 over the three years. Required: 1. Prepare a differential analysis on February 21 as to whether Duncan Company should lease (Alternative 1) or sell (Alternative 2) the machine. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter “0”. A colon (:) will automatically appear if required. 2. Should Duncan Company lease (Alternative 1) or sell…

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