Lease or Sell

Bullwinkle Company owns a equipment with a cost of $362,500 and accumulated depreciation of $53,400 that can be sold for $277,800, less a 4% sales commission. Alternatively, Bullwinkle Company can lease the equipment to another company for three years for a total of $284,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the equipment would total $15,700 over the three years.

Prepare a differential analysis on March 23 as to whether Bullwinkle Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2)
March 23
	Lease Equipment (Alternative 1)	Sell Equipment (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$	$	$
Costs
Income (Loss)	$	$	$

Should Bullwinkle Company lease (Alternative 1) or sell (Alternative 2) the equipment?