Differential Analysis for a Lease$-$or$-$Sell Decision

Sure$-$Bilt Construction Company is considering selling excess machinery with a book value of $$279,400($original cost of $$400,100$ less accumulated depreciation of $$120,700)$ for $$277,800,$ less a $5\%$ brokerage commission. Alternatively, the machinery can be leased to another company for a total of $$283,900$ for five years, after which it is expected to have no residual value. During the period of the lease, Sure$-$Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $$26,400.$

Question Content Area

a$.$ Prepare a differential analysis, dated May $25$ to determine whether Sure$-$Bilt should lease $($Alternative $1)$ or sell $($Alternative $2)$ the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis

Lease Machinery $($Alt$.1)$ or Sell Machinery $($Alt$.2)$

May $25$

Lease Machinery

$($Alternative $1)$ Sell Machinery

$($Alternative $2)$ Differential Effect

on Income

$($Alternative $2)$

Revenues $fill in the blank $6$f$35$a$3040$f$81076\_1$ $fill in the blank $6$f$35$a$3040$f$81076\_2$ $fill in the blank $6$f$35$a$3040$f$81076\_3$

Costs fill in the blank $6$f$35$a$3040$f$81076\_4$ fill in the blank $6$f$35$a$3040$f$81076\_5$ fill in the blank $6$f$35$a$3040$f$81076\_6$

Income $($Loss$)$ $fill in the blank $6$f$35$a$3040$f$81076\_7$ $fill in the blank $6$f$35$a$3040$f$81076\_8$ $fill in the blank $6$f$35$a$3040$f$81076\_9$

b$.$ The net gain from selling is ${?}_{{?}_{?}}{?}_{{?}_{?}}{?}_{{?}_{?}}{?}_{{?}_{?}}.$