timberlake company

Lease or Sell Timberlake Company owns equipment with a cost of $165,000 and accumulated depreciation of $60,000 that can be sold for $82,000 less a 6% sales commission. Alternatively, Timberlake Company can lease the equipment to another company for five years for a total of $84,600, at the end of which there is no residual value. In addition, the repair, Insurance, and property tax expense that would be incurred by Timberlake Company on the equipment would total $7,950 over the five years. Prepare a differential analysis on March 23 as to whether Timberlake Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23 Differential Effect Lease Equipment Sell Equipment on Income Alternative 1) (Alternative 2) (Alternative 2) Revenues 84,600 82,000 -2,600 Costs X 7.950 X 4,920 X 3,030 Income (Loss) 76,650 77.080 130 Feedback Check My Work Subtract the lease costs from the lease revenues. Subtract the sell equipment costs from the sell equipment revenue Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2 Should Timberlake Company tease (Alternative 1) or sell (Alternative 2) the equipment Sell the equipment