Determine the net differential income from the lease alternative of this financial accounting question Assume that Pinnacle Corp. is considering disposing of machinery that cost$125,800.00 and has $87,500.00 of accumulated depreciation to date. PinnacleCorp. can sell the machinery through an auction for $45,200.00 less 6%auctioneer fee. Alternatively, Horizon Industries has offered to lease themachinery for four years for a total of $72,400.00. Pinnacle will incurmaintenance, insurance, and property tax expenses estimated at $13,800.00. Atlease end, the machinery is expected to have no residual value. Determine thenet differential income from the lease alternative.

Step 1: Define Net Differential IncomeNet Differential Income refers to the difference in financial…

Answered: Assume that Pinnacle Corp. is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Keating Co. is considering disposing of equipment with a cost of $62,000 and accumulated depreciation of $43,400. Keating Co. can sell the equipment through a broker for $28,000, less a 9% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $12,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is Oa. $6,664 Ob. $11,424 Oc. $14,280 Ⓒd. $9,520
Keating Co. is considering disposing of equipment with a cost of $74,000 and accumulated depreciation of $51,800. Keating Co. can sell the equipment through a broker for $33,000, less a 7% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $12,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is Oa. $4,417 Ob. $7,572 Oc. $9,465 Od. $6,310 Previous Next 7:36 PM 12/13/2020 CP DELL
Keating Co. is considering disposing of equipment with a cost of $52,000 and accumulated depreciation of $36,400. Keating Co. can sell the equipment through a broker for $33,000 less 10% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is: A. $8,760 B. $5,110 C. $10,950 D. $7,300
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Key Corp. plans to replace a production machine that was acquired several years ago. Acquisition cost is P450,000 with salvage value of P50,000. The machine being considered is worth P800,000 and the supplier is willing to accept the old machine at a trade-in value of P60,000. Should the company decide not to acquire the new machine, it needs to repair the old one at a cost of P200,000. Tax-wise, the trade-in transaction will not have any implication but the cost to repair is tax-deductible. The effective corporate tax rate is 35% of net income subject to tax. For purposes of capital budgeting, the net investment in the new machine is * A. P540,000 B. P610,000 C. P660,000 D. P800,000 Other:

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