Lease or Sell

Kincaid Company owns a equipment with a cost of $362,300 and accumulated depreciation of $52,800 that can be sold for $273,300, less a 5% sales commission. Alternatively, Kincaid Company can lease the equipment to another company for three years for a total of $287,400, 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 $16,100 over the three years.

Prepare a differential analysis on March 23 as to whether Kincaid 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 Kincaid Company lease (Alternative 1) or sell (Alternative 2) the equipment?

Lease the equipmentSell the equipmentLease the equipment