Inman Industries is considering selling excess machinery with a book value of $279,700 (original cost of $399,400 less accumulated depreciation of $119,700) for $276,200 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $286,900 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Industries' costs of repairs, insurance, and property tax expenses are expected to be $25,400. a. Prepare a differential analysis report for the lease or sell decision. INMAN INDUSTRIES Proposal to Lease or Sell Machinery Differential Analysis Report Differential revenue from alternatives: Revenue from lease v Proceeds from sale v Differential revenue from lease v Differential cost of alternatives: Repairs, Insurance, and property tax expenses from lease v Commission on sale v Differential cost of lease v Net differential gain from lease alternative v

Inman Industries is considering selling excess machinery with a book value of $279,700 (original cost of $399,400 less accumulated depreciation of $119,700) for $276,200 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $286,900 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Industries' costs of repairs, insurance, and property tax expenses are expected to be $25,400. a. Prepare a differential analysis report for the lease or sell decision. INMAN INDUSTRIES Proposal to Lease or Sell Machinery Differential Analysis Report Differential revenue from alternatives: Revenue from lease v Proceeds from sale v Differential revenue from lease v Differential cost of alternatives: Repairs, Insurance, and property tax expenses from lease v Commission on sale v Differential cost of lease v Net differential gain from lease alternative v

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1E: Differential analysis for a lease or sell decision Burlington Construction Company is considering...

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Differential analysis for a lease or sell decision Burlington Construction Company is considering selling excess machinery with a book value of 115,000 (original cost of 275,000 less accumulated depreciation of 160,000) for 90,000, less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of 100,000, for four years, after which it is expected to have no residual value. During the period of the lease, Burlington Construction Companys costs of repairs, insurance, and property tax expenses are expected to be 9,000. a. Prepare a differential analysis dated January 15 to determine whether Burlington Construction Company 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.
Inman Construction Company is considering selling excess machinery with a book value of $279,300 (original cost of $400,900 less accumulated depreciation of $121,600) for $274,300, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $283,200 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 $25,100. 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. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Differential Effect Sell Machinery (Alternative 2) Lease Machinery on Income (Alternative 2) (Alternative 1) Revenues Costs Income (Loss) Feedback T Check My Work Subtract…
Inman Construction Company is considering selling excess machinery with a book value of $282,400 (original cost of $401,900 less accumulated depreciation of $119,500) for $277,700, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $287,100 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 $25,800. 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. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Lease Machinery(Alternative 1) Sell Machinery(Alternative 2) Differential Effecton Income(Alternative 2) Revenues $fill in the blank 0e9403fe1fc606b_1…
Burlington Construction Company is considering selling excess machinery with a book value of $280,500 (original cost of $398,800 less accumulated depreciation of $118,300) for $275,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,200 for five years, after which it is expected to have no residual value. During the period of the lease, Burlington Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,800. a. Prepare a differential analysis dated January 15 to determine whether Burlington Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss. Differential AnalysisLease (Alt. 1) or Sell (Alt. 2) MachineryJanuary 15 LeaseMachinery(Alternative 1) SellMachinery(Alternative 2) DifferentialEffects(Alternative 2) Revenues $fill in the blank 0e8800fac01dfcd_1 $fill in the blank 0e8800fac01dfcd_2 $fill…
Stowe Construction Company is considering selling excess machinery with a book value of $280,300 (original cost of $400,900 less accumulated depreciation of $120,600) for $274,300, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $284,100 for 5 years, after which it is expected to have no residual value. During the period of the lease, Stowe Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $26,400. a. Prepare a differential analysis dated March 21 to determine whether Stowe Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss. Differential AnalysisLease (Alt. 1) or Sell (Alt. 2) MachineryMarch 21 Line Item Description LeaseMachinery(Alternative 1) SellMachinery(Alternative 2) DifferentialEffects(Alternative 2) Revenues 284100 Costs 26400 Profit (loss) 257700 260585
Sure-Bilt Construction Company is considering selling excess machinery with a book value of $278,400 (original cost of $398,100 less accumulated depreciation of $119,700) for $276,300, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $287,500 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,900. a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt 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. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Lease Machinery(Alternative 1) Sell Machinery(Alternative 2) Differential Effecton Income(Alternative 2) Revenues $ $ $ Costs…
Eclipse Construction Company is considering selling excess machinery with a book value of $280,000 (original cost of $400,000 less accumulated depreciation of $120,000) for $221,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $216,000 for five years, after which it is expected to have no residual value. During the period of the lease, Eclipse Construction Company’s costs of repairs, insurance, and property tax expenses are expected to be $14,200. Required: A. Prepare a differential analysis, dated April 16 to determine whether Eclipse should lease (Alternative 1) or sell (Alternative 2) the machinery. 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. B. On the basis of the data…
Stowe Construction Company is considering selling excess machinery with a book value of $281,500 (original cost of $400,300 less accumulated depreciation of $118,800) for $274,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $285,500 for 5 years, after which it is expected to have no residual value. During the period of the lease, Stowe Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $24,900. Question Content Area a. Prepare a differential analysis dated March 21 to determine whether Stowe Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss. Differential AnalysisLease (Alt. 1) or Sell (Alt. 2) MachineryMarch 21 Line Item Description LeaseMachinery(Alternative 1) SellMachinery(Alternative 2) DifferentialEffects(Alternative 2) Revenues $Revenues $Revenues $Revenues Costs Costs Costs Costs…
Stowe Construction Company is considering selling excess machinery with a book value of $280,700 (original cost of $399,000 less accumulated depreciation of $118,300) for $277,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $285,600 for 5 years, after which it is expected to have no residual value. During the period of the lease, Stowe Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $24,500. a. Prepare a differential analysis dated March 21 to determine whether Stowe Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss. Differential Analysis Lease (Alt. 1) or Sell (Alt. 2) Machinery March 21 Lease Sell Line Item Description Machinery Machinery Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) < Revenues Costs Profit (loss) ง
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Beemer Construction Company is considering selling excess machinery with a bookvalue of $280,000 (original cost of $400,000 less accumulated depreciation of$120,000) for $221,000, less a 5% brokerage commission. Alternatively, the machinerycan be leased for a total of $216,000 for five years, after which it is expected to haveno residual value. During the period of the lease, Eclipse Construction Company'scosts of repairs, insurance, and property tax expenses are expected to be $14,200. Prepare and show in solution a differential analysis, dated April 16 to determinewhether Beemer should lease (Alternative 1) or sell (Alternative 2) the machinery