Question
Keating Co. is considering disposing of equipment that cost $65,000 and has $45,500 of accumulated depreciation to date. Keating Co. can sell the equipment through
Keating Co. is considering disposing of equipment that cost $65,000 and has $45,500 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $28,000 less a 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $45,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 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. $9,240 loss
b. $11,088 profit
c. $13,860 profit
d. $6,468 loss
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