Question
Duncan Company owns a machine with a cost of $301,000 and accumulated depreciation of $64,430 that can be sold for $266,900 less a 4% sales
Duncan Company owns a machine with a cost of $301,000 and accumulated depreciation of $64,430 that can be sold for $266,900 less a 4% sales commission. Alternatively, Duncan Company can lease the machine to another company for three years for a total of $277,610, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Duncan Company on the machine would total $19,286 over the three years.
Required: | |
1. | Prepare a differential analysis on February 21 as to whether Duncan Company should lease (Alternative 1) or sell (Alternative 2) the machine. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter 0. A colon (:) will automatically appear if required. |
2. | Should Duncan Company lease (Alternative 1) or sell (Alternative 2) the machine? Should Duncan Company lease (Alternative 1) or sell (Alternative 2) the machine? The company is indifferent since the result is the same regardless of which alternative is chosen. Lease the machine Sell the machine |
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