P21-4B Last year (2016), Simmons Company installed new factory equipment. The owner of the company, Gene Simmons, recently returned from an industry equipment exhibition where he watched computerized equipment demonstrated He was impressed with the equipment's speed and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new equipment. In addition, he asked the company's accountant to provide him with cost data on the company's equipment This information is presented below. Net Income (b-2) 4 year Income Statement Revenues (360,000 x 4 yrs) Less Costs: Old Equipment $210,000 New Equipment $250 000 Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation: Variable Fixed 0 5 years Straight-line 4 years Straight-line $50,000 30,000 $12.000 5,000 Operating (net) Income Annual revenues are $360,000, and selling and administrative expenses are $45,000, regardless of which equipment is used. If the old equipment is replaced now, at the beginning of 2017, Simmons Company will be able to sell it for $58,000 Net Income Instructions (a) Determine any gain or loss if the old equipment is replaced (b) Prepare a 4-year summarized income statement for each of the following assumptions (1) The old equipment is retained (2) The old equipment is replaced. (c) Using incremental analysis, determine if the old equipment should be replaced (c) Retain C Incremental Analysis Equipme (Scroll down to Prob 21-4A to see how "they" did it)! Prob 21-4B (a)- Show your calculations below: Totals Book Value FYI: This is NOT the homework. It is the 21-1A&Prob 21-4A. Your assignment is Net Income (b-2) 4 year Income Statement Revenues (360,000 x 4 yrs) Replace Old Equipment 1,440,000 Less Costs: Operating (net) Income ich be Net Income (c) Retain Old Equipment Replace Old Equipment Net Income Increase or (Decrease) Incremental Analysis Totals