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Astro Company owns equipment with a cost of $367,800 and accumulated depreciation of $55,800 that can be sold for $277,000, less a 5% sales
Astro Company owns equipment with a cost of $367,800 and accumulated depreciation of $55,800 that can be sold for $277,000, less a 5% sales commission. Alternatively, Astro Company can lease the equipment for three years for a total of $288,900, 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 $16,700 over the three year lease. a. Prepare a differential analysis on August 7 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) August 7 Lease Sell Differential Equipment Equipment Effects (Alternative (Alternative (Alternative 1) 2) 2) Revenues Costs Profit (Loss) All work saved. 1000 Previous Next>
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