Question: Timberlake Company owns equipment with a cost of 165 000
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, the equipment can be leased by Timberlake 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, 2014, as to whether Timberlake Company should lease (Alternative 1) or sell (Alternative 2) the equipment.
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