UIC Erevator New Erevator $102,500 $159.000 0 0 5 years 4 years Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation Variable Straight-line Straight line $34,000 $9.000 Fixed 23,400 8,000 Annual revenues are $240,000, 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 2020. Richter Condos will be able to sell it for $25,100. (a) Your answer is correct Determine any gain or loss if the old elevator is replaced. Lousonsale 569001 Prepare a 4-year summarized income statement for each of the following assumptions: (1) The old elevator is retained. Retain Old Elevator Revenues $ 960000 Less costs: Variable costs 136000 i Fixed costs 93600 Selling & administrative 112000 Depreciation 820001 423600 Net income $ 536400 (2) The old elevator is replaced. Replace Old Elevator Revenues $ 960000 Less costs: Variable costs 36000 Fixed costs 32000 i Selling & administrative 112000 Depreciation 159,000 339,000 i Operating income 621,000 Loss on old elevator 56,900 i Net Income 564,100 Using incremental analysis, determine if the old elevator should be replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number eg.-15 or parentheses e.g. (15)) Retain Old Elevator Replace Old Elevator Net Income Increase (Decrease) 136000 $ Variable operating costs Fixed operating costs 93600 32000 New elevator cost Salvage on old elevator Totals The old elevator should be replaced