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 watche 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 5 years Estimated useful life 4 years Depreciation method Straight-line Straight-line Annual operating costs other than depreciation: $34,800 Variable $10,000 Fixed 22,800 8,800 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 $25,600. Determine any gain or loss if the old elevator is replaced. Prepare a 4-year summarized income statement for each of the following assumptions: (1) The old elevator is retained. Retain Old Elevator Revenues Less costs: Variable costs Fixed costs Selling & administrative Depreciation Net income 2$ (2) The old elevator is replaced. Replace Old Elevator Revenues 24 Less costs: Variable costs %24 %24 Selling & administrative Depreciation Operating income Less: Loss on old elevator Net income LINK TO TEXT Using incremental analysis, determine (45).) the old elevator should be replaced. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. Net Income Retain Replace Old Elevator Increase Old Elevator (Decrease) Variable operating costs 24 $4 Fixed operating costs New elevator cost Salvage on old elevator Totals LINK TO TEXT By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor