The owner of the company Ron Richter, recently returned from an industry equipment P20-4A Last year (2016), Richter Condos installed a mechanized elevator for its tenants with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition where he watched a computerized elevator demonstrated. He was impressed new elevator. In addition, he asked the company's accountant to provide him with cost exhibition, he asked his purchasing agent to collect price and operating cost data on the data on the company's elevator. This information is presented below. New Elevator $160,000 0 4 years Straight-line $ 10,000 8,500 Old Elevator Purchase price $120,000 Estimated salvage value 0 Estimated useful life 5 years Depreciation method Straight-line Annual operating costs other than depreciation: Variable $ 35,000 Fixed 23.000 regardless of which elevator is used. If the old elevator is replaced now at the beginning of Annual revenues are $240,000, and selling and administrative expenses are $29.000 2017, Richter Condos will be able to sell it for $25.000 Instructions (a) Determine any gain or loss if the old elevator is replaced. (b) Prepare a 4-year summarized income statement for each of the following assumptions: (1) The old elevator is retained. (2) The old elevator is replaced. (c) Using incremental analysis, determine if the old elevator should be replaced (d) Write a memo to Ron Richter explaining why any gain or loss should be ignored in the decision to replace the old elevator