Problem 12-4 (Part Level Submission) Last year (2016), Riverbed 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 $100,000 New Elevator $160,000 5 years Straight-line 4 years Straight-line Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation: Variable Fixed $34,700 24,000 $9,000 8,100 Annual revenues are $241,000, and selling and administrative expenses are $28,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017, Riverbed Condos will be able to sell it for $25,600. (a) Your answer is correct. Determine any gain or loss if the old elevator is replaced. Loss on sale 54,400 (b) X Your answer is incorrect. Try again. Prepare a 4-year summarized income statement for each of the following assumptions: (1) The old elevator is retained. Retain Old Elevator X 960,164.00 Revenues Less costs: Variable costs 35,388.00 Fixed costs 23,804.00 Selling & administrative 29,363.00 Depreciation 79,520.00 168,075.00 Net income 792,089 (2) The old elevator is replaced. Replace Old Elevator Revenues 960,164.00 Less costs: Variable costs 10,918.00 Fixed costs 8,984.00 Selling & administrative 159,200.00 Depreciation 29,363.00 208,465.00 Operating income 751,699 Less: Loss on old elevator 40,390 Net income 711,309