Lease or Sell

Felix Company owns a equipment with a cost of $361,800 and accumulated depreciation of $53,100 that can be sold for $276,200, less a 5% sales commission. Alternatively, Felix Company can lease the equipment to another company for three years for a total of $285,900, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Felix Company on the equipment would total $15,400 over the three years.

Question Content Area

Prepare a differential analysis on March 23 as to whether Felix 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	$fill in the blank	$fill in the blank	$fill in the blank
Costs	fill in the blank	fill in the blank	fill in the blank
Income (Loss)	$fill in the blank	$fill in the blank	fill in the blank

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