Problem 12-4 Last year (2016), Indigo Condes installed a mechanimed elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment to where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company's accountant to provide him with cost data on the company's elevator This information is presented below Old Elevator $96,000 Elevator $160,000 Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation: Variable . 5 years Straight-line 4 years Straight-line $34,800 22,800 $10,000 8,800 Annual revenues are $241,000, and selling and administrative expenses are $29,000, regardless of which elevator is used. If the old eleviis replaced now, at the beginning of 2017, Indigo Condos will be able to sell it for $25,600. Determine any gain or loss if the old elevator is replaced Prepare a 4-year summarized Income statement for each of the following assumptions: (1) The old elevator is retained. Retain Old Elevator Revenues Less costs: Study Variable costs Fixed costs Selling & administrative Depreciation Net Income (2) The old elevator is replaced. Replace Old Elevator Revenues Less costs: Variable costs Fixed costs Selling & administrative Depreciation Operating income Less: Loss on old elevator Net income . -45 or parentheses Using incremental analysis, determine if the old elevator should be replaced. (Enter negative amounts using either a negative sigo preceding the number (45).) Net Income Old Elevator Old Elevator Variable seating costs Fixed operating costs New elevator cost Salvage on old elevator Problem 12-4 Last year (2016), Indigo Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry . equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked. the company's accountant to provide him with cost data on the company's elevator. This information is presented below. Old Elevator New Elevator Purchase price $96,000 $160,000 Estimated salvage value Estimated useful life 5 years 4 years Depreciation method Straight-line Straight-line Annual operating costs other than depreciation: Variable $34,800 $10,000 8,800 Fixed 22,800 Annual revenues are $241,000, and selling and administrative expenses are $29,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017, Indigo Condos will be able to sell it for $25,600. TODIGI 12 + Last year (2016), Indigo Condes installed a mechanted elevator for its tenants. The owner of the company, Ron Richter, recently returned from an Industry equipment ahibition where he watched a computere devator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new devet addition, he asked the company's accountant to provide him with cost data on the company's devator. This information is presented below 4 years Old Elevator Elevator Purchase price $96,000 $160,000 Estimated salvage value Estimated useful life 5 years Depreciation method Straight-line Straight-line Annual operating costs other than depreciation: $34,800 $10,000 22,800 8.800 Annual revenues are $241,000, and selling and administrative expenses are $20,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017, Indo Condos will be able to set $25,600. Determine any gain or loss if the old elevator is replaced. Prepare a 4-year summarized income statement for each of the following assumptions (1) The old elevator is retained. Retain Old Elevator Revenues Less costs Fixed costs Selling & administrative Depreciation Net Income Depreciation Net Income (2) The old elevator is replaced. Replace Old Elevator Revenues Less costs: Variable costs Fixed costs Selling & administrative Depreciation Operating income Less: Loss on old elevator Net income Using Incremental analysis, determine if the old elevator should be replaced. (Enter negative amounts using either a negative sign preceding Retain old Elevator Replace Old Elevator Net Income Increase (Decrease) Variable operating costs Fixed operating costs New elevator cost Salvage on old elevator Totals