Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of $281,500 (original cost of $401,300 less accumulated depreciation of $119,800) for $275,000 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $284,900 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Industries' costs of repairs, insurance, and property tax expenses are expected to be $25,900. a. Prepare a differential analysis report for the lease or sell decision. SURE-BILT INDUSTRIES Proposal to Lease or Sell Machinery Differential Analysis Report Differential revenue from alternatives: Revenue from lease v Proceeds from sale Differential revenue from lease v Differential cost of alternatives: Repairs, insurance, and property tax expenses from lease v Commission on sale Differential cost of lease Net differential gain from lease alternative

Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of $281,500 (original cost of $401,300 less accumulated depreciation of $119,800) for $275,000 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $284,900 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Industries' costs of repairs, insurance, and property tax expenses are expected to be $25,900. a. Prepare a differential analysis report for the lease or sell decision. SURE-BILT INDUSTRIES Proposal to Lease or Sell Machinery Differential Analysis Report Differential revenue from alternatives: Revenue from lease v Proceeds from sale Differential revenue from lease v Differential cost of alternatives: Repairs, insurance, and property tax expenses from lease v Commission on sale Differential cost of lease Net differential gain from lease alternative

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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