Exercises 1. Grimstone Construction Company is considering selling excess machinery with a book value of $200,000 (original cost of $355,000 less accumulated depreciation of $155,000) for $205,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $225,000 for four years, after which it is expected to have no residual value. During the period of the lease, Grimstone Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $34,400. a. Prepare a differential analysis, dated November 30th to determine whether Grimstone should lease (Alternative 1) or sell (Alternative 2) the machinery. b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain.

Exercises 1. Grimstone Construction Company is considering selling excess machinery with a book value of $200,000 (original cost of $355,000 less accumulated depreciation of $155,000) for $205,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $225,000 for four years, after which it is expected to have no residual value. During the period of the lease, Grimstone Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $34,400. a. Prepare a differential analysis, dated November 30th to determine whether Grimstone should lease (Alternative 1) or sell (Alternative 2) the machinery. b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain.

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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4.
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am. 120.
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