Lease or Sell Decision

Inman Industries is considering selling excess machinery with a book value of $278,200 (original cost of $399,900 less accumulated depreciation of $121,700) for $275,900 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $286,500 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Industries' costs of repairs, insurance, and property tax expenses are expected to be $25,100.

a. Prepare a differential analysis report for the lease or sell decision.

INMAN INDUSTRIES Proposal to Lease or Sell Machinery Differential Analysis Report

Differential revenue from alternatives:
Revenue from lease	$
Proceeds from sale
Differential revenue from lease		$
Differential cost of alternatives:
Repairs, insurance, and property tax expenses from lease	$
Commission on sale
Differential cost of lease
Net differential income from lease alternative		$