Question
Keating Co. is considering disposing of equipment that cost $79,000 and has $55,300 of accumulated depreciation to date. Keating Co. can sell the equipment through
Keating Co. is considering disposing of equipment that cost $79,000 and has $55,300 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $31,000 less a 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. 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.$14,976 profit
b.$8,736 loss
c.$18,720 profit
d.$12,480 loss
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