Inman Construction Company is considering selling excess machinery with a book value of $284,000 (original cost of $402,000 less accumulated depreciation of $118,000) for $275,000, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $283,900 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $26,000. Question Content Area a. Prepare a differential analysis, dated May 25 to determine whether Inman should lease (Alternative 1) or sell (Alternative 2) the machinery.
Differential Analysis for a Lease-or-Sell Decision
Inman Construction Company is considering selling excess machinery with a book value of $284,000 (original cost of $402,000 less
Question Content Area
a. Prepare a differential analysis, dated May 25 to determine whether Inman should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
| Lease Machinery (Alternative 1) |
Sell Machinery (Alternative 2) |
Differential Effect on Income (Alternative 2) |
|
| Revenues | $fill in the blank 10a13606ffe7fbe_1 | $fill in the blank 10a13606ffe7fbe_2 | $fill in the blank 10a13606ffe7fbe_3 |
| Costs | fill in the blank 10a13606ffe7fbe_4 | fill in the blank 10a13606ffe7fbe_5 | fill in the blank 10a13606ffe7fbe_6 |
| Income (Loss) | $fill in the blank 10a13606ffe7fbe_7 | $fill in the blank 10a13606ffe7fbe_8 | $fill in the blank 10a13606ffe7fbe_9 |
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