Homework Answers
| a) | ||
| Differential Analysis report | ||
| Differential revenue from Alternatives: | ||
| Revenue from lease | $215,000 | |
| Proceeds from sale | ($145,000) | |
| (A) Differential revenue from lease | $70,000 | |
| Differential cost of alternative: | ||
| Repair, insurance and property tax expense from lease | $80,000 | |
| Commission on sale | $7,250 | |
| (B) Differential cost of lease | $72,750 | |
| Net differential loss from lease alternative (A -B) | ($2,750) | |
| b) As there is Differential Loss of ($2,750) it is advisable to sell the machinery |
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Exercises E12-1 Lease or sell decision Orwell Industries is considering selling excess machinery with a book...
a. Prepare a differential analysis report for the lease or sell decision. b. On the basis...
a. Prepare a differential analysis report for the lease or sell
decision.
b. On the basis of the data presented, would it be advisable to
lease or sell the machinery? Explain.
E12-1 Lease or sell decision Orwell Industries is considering selling excess machinery with a book value of $300,000 (original cost of $950,000 less accumulated depreciation of $650,000) for $145,000 less a 5% brokerage commission. Alternatively, the machinery can be leased out for a total of $215,000 for five years,...
Lease or sell decision E12-1 Yamada Industries is considering selling excess machinery with a book value...
Lease or sell decision E12-1 Yamada Industries is considering selling excess machinery with a book value of $220,000 (original cost of $600,000 less accumulated depreciation of $380, 000) for $200,000, less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $290,000 for five years, after which it is expected to have no residual value. During the period of the lease, Yamada Industries' costs of repairs, insurance, and property tax expenses are expected to be $71,000....
Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of...
Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of $283,500 (original cost of $401,500 less accumulated depreciation of $118,000) for $274,300 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $285,500 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Industries' costs of repairs, insurance, and property tax expenses are expected to be $24,500. a. Prepare...
Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of...
Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of $279,700 (original cost of $398,900 less accumulated depreciation of $119,200) for $276,500 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $286,000 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Industries' costs of repairs, insurance, and property tax expenses are expected to be $25,900. a. Prepare...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $277,800 (original cost of $399,600 less accumulated depreciation of $121,800) for $275,200, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $285,700 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $281,200 (original cost of $401,300 less accumulated depreciation of $120,100) for $276,800, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,800 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $280,900 (original cost of $400,600 less accumulated depreciation of $119,700) for $276,100, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $284,800 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $280,300 (original cost of $399,300 less accumulated depreciation of $119,000) for $277,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $286,800 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $279,600 (original cost of $399,400 less accumulated depreciation of $119,800) for $276,200, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $286,300 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $281,500 (original cost of $401.700 less accumulated depreciation of S 120,200) for $277,000, five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction insurance, and property tax expenses are expected to be $25,400 less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $284,700...
a. Prepare a differential analysis report for the lease or sell
decision.
b. On the basis of the data presented, would it be advisable to
lease or sell the machinery? Explain.
E12-1 Lease or sell decision Orwell Industries is considering selling excess machinery with a book value of $300,000 (original cost of $950,000 less accumulated depreciation of $650,000) for $145,000 less a 5% brokerage commission. Alternatively, the machinery can be leased out for a total of $215,000 for five years,...
Lease or sell decision E12-1 Yamada Industries is considering selling excess machinery with a book value of $220,000 (original cost of $600,000 less accumulated depreciation of $380, 000) for $200,000, less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $290,000 for five years, after which it is expected to have no residual value. During the period of the lease, Yamada Industries' costs of repairs, insurance, and property tax expenses are expected to be $71,000....
Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of $283,500 (original cost of $401,500 less accumulated depreciation of $118,000) for $274,300 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $285,500 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Industries' costs of repairs, insurance, and property tax expenses are expected to be $24,500. a. Prepare...
Lease or Sell Decision Sure-Bilt Industries is considering selling excess machinery with a book value of $279,700 (original cost of $398,900 less accumulated depreciation of $119,200) for $276,500 less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $286,000 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Industries' costs of repairs, insurance, and property tax expenses are expected to be $25,900. a. Prepare...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $277,800 (original cost of $399,600 less accumulated depreciation of $121,800) for $275,200, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $285,700 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $281,200 (original cost of $401,300 less accumulated depreciation of $120,100) for $276,800, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,800 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $280,300 (original cost of $399,300 less accumulated depreciation of $119,000) for $277,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $286,800 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company's costs of repairs, insurance, and property tax expenses are...
Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with a book value of $281,500 (original cost of $401.700 less accumulated depreciation of S 120,200) for $277,000, five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction insurance, and property tax expenses are expected to be $25,400 less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $284,700...
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