Question
Kincaid Company owns equipment with a cost of $365,300 and accumulated depreciation of $52,800 that can be sold for $276,000, less a 3% sales commission.
Kincaid Company owns equipment with a cost of $365,300 and accumulated depreciation of $52,800 that can be sold for $276,000, less a 3% sales commission. Alternatively, Kincaid Company can lease the equipment for three years for a total of $285,200, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Kincaid Company on the equipment would total $16,500 over the three year lease.
Question Content Area
a. Prepare a differential analysis on August 7 as to whether Kincaid Company should lease (Alternative 1) or sell (Alternative 2) the equipment. If required, use a minus sign to indicate a loss.
Lease Equipment (Alternative 1) | Sell Equipment (Alternative 2) | Differential Effects (Alternative 2) | |
Revenues | $fill in the blank 1cf2240cb036041_1 | $fill in the blank 1cf2240cb036041_2 | $fill in the blank 1cf2240cb036041_3 |
Costs | fill in the blank 1cf2240cb036041_4 | fill in the blank 1cf2240cb036041_5 | fill in the blank 1cf2240cb036041_6 |
Profit (Loss) | $fill in the blank 1cf2240cb036041_7 | $fill in the blank 1cf2240cb036041_8 | $fill in the blank 1cf2240cb036041_9 |
Question Content Area
b. Should Kincaid Company lease (Alternative 1) or sell (Alternative 2) the equipment?
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