Question
Keating Co. is considering disposing of equipment that cost $54,000 and has $37,800 of accumulated depreciation to date. Keating Co. can sell the equipment through
Keating Co. is considering disposing of equipment that cost $54,000 and has $37,800 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $27,000 less a 7% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $8,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential profit or loss from the sell alternative is a
a.$13,890 loss
b.$9,723 loss
c.$20,835 profit
d.$16,668 profit
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