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Drop down: should or should not t the beginning of last yesr(2019), Pharosh Condos installed a mechsnized elevator for its tenants. The owner of the
Drop down: should or should not
t the beginning of last yesr(2019), Pharosh Condos installed a mechsnized elevator for its tenants. The owner of the company, Ron Pharoah, recently returmed from an industry equipment exhibition where he wstched a computerized elevator demonstrated. He was impressed with the elevator'55peed comfort o n e and cost effioency, Upon return ng from the exhibition, he 85ked his purchasing agent to colect ce 5nd operating cost dste on the new elevator, n &Jdition, he asked the mps y 58ccounts t to prov'de him wth cost dste on the company's elevator, Ths Old Elevator $100,500o New Elevator $161,000 Purchase pnce Estimated salvage value Estimated useful life Depreciation method Annual operating costs s years years other than depreciation: 34,300 22,000 11,000 Foxed 8,000 Annual revenues are241,000 and selling and adm nistrative expenses are $28,000 regard ess of which elevator used rf the cld elevator s replaced no at the beginning of 2020 Pharoah Condes will b able to sell for $26,000. Determine any gain or loss if the old elevator is replaced. Prepare a 4-yesr summarized income statement for each of the foloxing assumptions: 1) The old elevator is retained. Retain old Elevator Less costs Variable costs fixed costs Selina & administrative Depreciation Net income (2) The old elevator is repl aced Replace Old Elevator Revenues Less costs roced costs ellig& administrative Operating income Loss on old elevator Using incremental ara sis, determine i the old eleva or shoid be replaced the f st two columns, enter costs and expenses as positive amounts and afby amounts received as aegative amounts. In he third coiuma, enter et icome increases as p sitive amounts and decreases as negative amounts. Enter negative amounts using elther s negative sign preceding the number e.q. -15 or parentheses e.g. (15).) negative sar auasid Replace old Elevator Old Elevator (Decrease) Varisble opersting costs Foxed operating costs Nen elevator cost Salvage on old elevstor Totals The old elevstor be replaoedStep by Step Solution
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