Campbell Moran manages the cutting department of Greene Fanning Company. He purchased a tree-cutting machine on January 1, year 2, for $390,000. The machine had an estimated useful life of 5 years and zero salvage value, and the cost to operate it is $87,000 per year. Technological developments resulted in the development of a more advanced machine available for purchase on January 1, year 3, that would allow a 25 percent reduction in operating costs. The new machine would cost $210,000 and have a 4-year useful life and zero salvage value. The current market value of the old machine on January 1 year 3, is $220,000, and its book value is $312,000 on that date. Straight-line depreciation is used for both machines. The company expects to generate $230,000 of revenue per year from the use of either machine. Required a. Recommend whether to replace the old machine on January 1 year 3 b. Prepare income statements for four years [year 3 through year 6) assuming that the old machine is retained. c. Prepare income statements for four years (year 3 through year 6) assuming that the old machine is replaced. Complete this question by entering your answers in the tabs below. Required A Required Required Recommend whether to replace the old machine on January 1 year 3. Replace with Decision K OL 220.000 Should the old machineberglaced on January 1 year 210.000 $ Yes Required > ampbell Moran manages the cutting department of Greene Fanning Company. He purchased a tree-cutting machine on January 1, ear 2, for $390,000. The machine had an estimated useful life of 5 years and zero salvage value, and the cost to operate it is $87,000 per year. Technological developments resulted in the development of a more advanced machine available for purchase on January 1 year 3, that would allow a 25 percent reduction in operating costs. The new machine would cost $210,000 and have a 4-year useful life and zero salvage value. The current market value of the old machine on January 1, year 3, is $220,000, and its book value is $312,000 on that date. Straight-line depreciation is used for both machines. The company expects to generate $230,000 of revenue per year from the use of either machine. Required a. Recommend whether to replace the old machine on January 1, year 3. b. Prepare income statements for four years [year 3 through year 6) assuming that the old machine is retained. C. Prepare income statements for four years Year 3 through year 6) assuming that the old machine is replaced. Complete this question by entering your answers in the tabs below. Required A Required B Required Prepare income statements for four years (year 3 through year 6) assuming that the old machine is retained. $ $ $ Depreciations Operating expense iconos) Year 3 230,000 (78.000) (67000) 65.000 Year $ 230,000 (78,000) (87.000) $ 55.000 Years $ 200,000 (34,000) (9.000) 87,000 Years 200,000 (34,000) 89.000) 87 000S Total 80,000 (324,000) 352.000) 304 000 S ( Required A Required > mpbell Moran manages the cutting department of Greene Fanning Company. He purchased a tree-cutting machine on Januar, ar 2, for $390,000. The machine had an estimated useful life of 5 years and zero salvage value, and the cost to operate it is $8 year. Technological developments resulted in the development of a more advanced machine available for purchase on Januar ar 3, that would allow a 25 percent reduction in operating costs. The new machine would cost $210,000 and have a 4-year useft nt market value of the old machine on January 1, year 3, is $220,000, and its book value is 312,000 on that date. Straight-line depreciation is used for both machines. The company expects to generate $230,000 of revenu per year from the use of either machine. Required a. Recommend whether to replace the old machine on January 1, year 3. b. Prepare income statements for four years (year 3 through year 6) assuming that the old machine is retained. c. Prepare income statements for four years [year 3 through year 6) assuming that the old machine is replaced. Complete this question by entering your answers in the tabs below. Required A Required B Required Prepare income statements for four years (year 3 through year 6) assuming that the old machine is replaced. Year 3 Year 4 Year 5 Year 6 Total Revenue $ 230.000 $ 230.000 $ 200,000 $ 260,000 $ 980,000 Depreciation (52,500) (52,500) (67,500) (67,500) (240,000) Operating expense (65250) (62,300) 3 (62,300) (255,100) Loss on disposal (2.000) (82000) Niet income oss) 5 $ 30.250 30.250 $ 112 250 112 250 5 130 200 130 200 S 10.200 S 402.900 (Required