Last year (2016),BlueCondos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company's accountant to provide him with cost data on the company's elevator. This information is presented below.

Old ElevatorNew ElevatorPurchase price$105,000$160,000Estimated salvage value00Estimated useful life5 years4 yearsDepreciation methodStraight-lineStraight-lineAnnual operating costsother than depreciation:Variable$35,100$11,000Fixed23,8008,000

Annual revenues are $241,000, and selling and administrative expenses are $29,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017,BlueCondos will be able to sell it for $24,500.

Determine any gain or loss if the old elevator is replaced.

Gain on sale

Loss on sale

$

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Prepare a 4-year summarized income statement for each of the following assumptions:

(1) The old elevator is retained.

Retain Old ElevatorRevenues$Less costs:Variable costs$Fixed costsSelling & administrativeDepreciationNet income$

(2) The old elevator is replaced.

Replace Old ElevatorRevenues$Less costs:Variable costs$Fixed costsSelling & administrativeDepreciationOperating incomeLess: Loss on old elevatorNet income$