Pull Company is considering the disposal of equipment that is no longer needed for operations. The equipment originally cost $600,000, and accumulated depreciation to date totals $460,000. An offer has been received to lease the machine for its remaining useful life for a total of $300,000, after which the equipment will have no salvage value. The repair, insurance, and property tax expenses during the period of the lease are estimated at $75,800. Alternatively, the equipment can be sold through a broker for $230,000 less a 10% commission. Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or sold. Pull Company Proposal to Lease or Sell Equipment June 15, 20XX Net revenue from leasing: Revenue from lease Costs associated with the lease Net revenue from lease Net revenue from selling: Sales price Commission expense on sale Net revenue from selling Net advantage of lease alternative
Pull Company is considering the disposal of equipment that is no longer needed for operations. The equipment originally cost $600,000, and accumulated depreciation to date totals $460,000. An offer has been received to lease the machine for its remaining useful life for a total of $300,000, after which the equipment will have no salvage value. The repair, insurance, and property tax expenses during the period of the lease are estimated at $75,800. Alternatively, the equipment can be sold through a broker for $230,000 less a 10% commission. Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or sold. Pull Company Proposal to Lease or Sell Equipment June 15, 20XX Net revenue from leasing: Revenue from lease Costs associated with the lease Net revenue from lease Net revenue from selling: Sales price Commission expense on sale Net revenue from selling Net advantage of lease alternative
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Pull Company is considering the disposal of equipment that is no longer needed for operations. The equipment originally cost $600,000, and accumulated depreciation to date totals $460,000. An offer has been received to lease the machine for its
remaining useful life for a total of $300,000, after which the equipment will have no salvage value. The repair, insurance, and property tax expenses during the period of the lease are estimated at $75,800. Alternatively, the equipment can be sold
through a broker for $230,000 less a 10% commission.
Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or sold.
Pull Company
Proposal to Lease or Sell Equipment
June 15, 20XX
Net revenue from leasing:
Revenue from lease
Costs associated with the lease
X
Net revenue from lease
X
Net revenue from selling:
Sales price
X
Commission expense on sale
X
Net revenue from selling
Net advantage of lease alternative
di
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