Lease or Sell

Bullwinkle Company owns equipment with a cost of $365,600 and accumulated depreciation of $56,300 that can be sold for $273,000, less a 5% sales commission. Alternatively, Bullwinkle Company can lease the equipment for three years for a total of $284,200, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the equipment would total $15,300 over the three year lease.

a. Prepare a differential analysis on February 18, as to whether Bullwinkle Company should lease (Alternative 1) or sell (Alternative 2) the equipment.

Differential Analysis
Lease (Alt. 1) or Sell (Alt. 2) Equipment
February 18
	Lease Equipment (Alternative 1)	Sell Equipment (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank de12f1045fd7064_1	$fill in the blank de12f1045fd7064_2	$fill in the blank de12f1045fd7064_3
Costs	fill in the blank de12f1045fd7064_4	fill in the blank de12f1045fd7064_5	fill in the blank de12f1045fd7064_6
Income (Loss)	$fill in the blank de12f1045fd7064_7	$fill in the blank de12f1045fd7064_8	$fill in the blank de12f1045fd7064_9

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