At the beginning of last year (2021), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the companys accountant to provide him with cost data on the companys elevator. This information is presented here. Old Elevator New Elevator Purchase price $95,000 $159,000 Estimated salvage value 0 0 Estimated useful life 5 years 4 years Depreciation method Straight-line Straight-line Annual operating costs other than depreciation: Variable $35,400 $10,000 Fixed 22,400 8,000 Annual revenues are $240,000, and selling and administrative expenses are $29,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2022, Richter Condos will be able to sell it for $25,800. (a) Determine any

gain or loss if the old elevator is replaced. select an option $enter gain or loss amount in dollars eTextbook and Media Save for LaterAttempts: 0 of 5 usedSubmit Answer (b) Prepare a 4-year summarized income statement for each of the following assumptions: (1) The old elevator is retained. Retain Old Elevator Revenues $enter a dollar amount Less costs: Variable costs $enter a dollar amount Fixed costs enter a dollar amount Selling & administrative enter a dollar amount Depreciation enter a dollar amount enter a subtotal of the previous four amounts Net income $enter a net income or loss amount in dollar (2) The old elevator is replaced. Replace Old Elevator Revenues $enter a dollar amount Less costs: Variable costs $enter a dollar amount Fixed costs enter a dollar amount Selling & administrative enter a dollar amount Depreciation enter a dollar amount enter a subtotal of the previous four amounts Operating income enter operating income amount in dollar Less: Loss on old elevator enter Loss on old elevator in dollars Net income $enter a net income or loss amount eTextbook and Media Save for LaterAttempts: 0 of 5 usedSubmit Answer (c) Using incremental analysis, determine if the old elevator should be replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -15 or parentheses e.g. (15).) Retain Old Elevator Replace Old Elevator Net Income Increase (Decrease) Variable operating costs $enter a dollar amount $enter a dollar amount $enter a dollar amount Fixed operating costs enter a dollar amount enter a dollar amount enter a dollar amount New elevator cost enter a dollar amount enter a dollar amount enter a dollar amount Salvage on old elevator enter a dollar amount enter a dollar amount enter a dollar amount Totals $enter a total dollar amount $enter a total dollar amount $enter a total dollar amount The old elevator select an option be replaced.