Sunland Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Sunland Roofing spent $70,200 refurbishing the lift. It has just determined that another $35,000 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $149,500. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $98,000 to $74,600 each year. Sunland Roofing could also rent out the new lift for about $9,000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $22,000 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 5 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45))

Sunland Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Sunland Roofing spent $70,200 refurbishing the lift. It has just determined that another $35,000 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $149,500. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $98,000 to $74,600 each year. Sunland Roofing could also rent out the new lift for about $9,000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $22,000 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 5 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45))

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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