Inman Construction Company is considering selling excess machinery with a book value of $280,000 (original cost of

Question:

Inman Construction Company is considering selling excess machinery with a book value of $280,000 (original cost of $400,000 less accumulated depreciation of $120,000) for $292,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $312,000 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Construction Company’s costs of repairs, insurance, and property tax expenses are expected to be $36,000.
(a) Prepare a differential analysis report, dated January 3, 2010, 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.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: