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Astro Company owns equipment with a cost of $364,000 and accumulated depreciation of $52,500 that can be sold for $274,600, less a 3% sales
Astro Company owns equipment with a cost of $364,000 and accumulated depreciation of $52,500 that can be sold for $274,600, less a 3% sales commission. Alternatively, Astro Company can lease the equipment for 3 years for a total of $286,800, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Astro Company on the equipment would total $16,900 over the 3-year lease. a. Prepare a differential analysis on October 29 as to whether Astro Company should lease (Alternative 1) or sell (Alternative 2) the equipment. If required, use a minus sign to indicate a loss. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) October 29 Lease Line Item Description Equipment Sell Equipment Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs Profit (Loss) b. Should Astro Company lease (Alternative 1) or sell (Alternative 2) the equipment?
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