Kincaid Company owns a machine with a cost of $365,000 and accumulated depreciation of $55,000 that can
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Kincaid Company owns a machine with a cost of $365,000 and accumulated depreciation of $55,000 that can be sold for $276,000, less a 5% sales commission. Alternatively, the machine can be leased by Kincaid Company for three years for a total of $287,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Kincaid Company on the machine would total $15,900 over the three years. Prepare a differential analysis on January 12, 2012, as to whether Kincaid Company should lease (Alternative 1) or sell (Alternative 2) the equipment.
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Financial and Managerial Accounting Using Excel for Success
ISBN: 978-1111993979
1st edition
Authors: James Reeve, Carl S. Warren, Jonathan Duchac
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