Question
Differential Analysis for a Lease-or-Sell Decision Sure-Bilt Construction Company is considering selling excess machinery with a book value of $277,200 (original cost of $399,000 less
Differential Analysis for a Lease-or-Sell Decision Sure-Bilt Construction Company is considering selling excess machinery with a book value of $277,200 (original cost of $399,000 less accumulated depreciation of $121,800) for $275,500, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $286,600 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $26,200. Question Content Area a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Lease Machinery (Alternative 1) Sell Machinery (Alternative 2) Differential Effects (Alternative 2) Revenues $fill in the blank db6ba003dfe9fc3_1 $fill in the blank db6ba003dfe9fc3_2 $fill in the blank db6ba003dfe9fc3_3 Costs fill in the blank db6ba003dfe9fc3_4 fill in the blank db6ba003dfe9fc3_5 fill in the blank db6ba003dfe9fc3_6 Profit (loss) $fill in the blank db6ba003dfe9fc3_7 $fill in the blank db6ba003dfe9fc3_8 $fill in the blank db6ba003dfe9fc3_9 Question Content Area b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain. The net from selling is $fill in the blank 416b92fad02c040_3 .
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