Pull Company is considering the disposal of equipment that is no longer needed for operations.The equipment originally cost $600,000, and accumulated depreciation to date totals $460,000.An offer has been received to lease the machine for its remaining useful life for a total of $300,000, after which the equipment will have no salvage value.The repair, insurance, and property tax expenses during the period of the lease are estimated at $75,800.Alternatively, the equipment can be sold through a broker for $230,000 less a 10% commission.
?
Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or sold.

Question

Quizplus · Accepted Answer

The Answer of Pull Company is considering the disposal of equipment that is no longer needed for operations.The equipment originally cost $600,000, and accumulated depreciation to date totals $460,000.An offer has been received to lease the machine for its remaining useful life for a total of $300,000, after which the equipment will have no salvage value.The repair, insurance, and property tax expenses during the period of the lease are estimated at $75,800.Alternatively, the equipment can be sold through a broker for $230,000 less a 10% commission.
?
Prepare a differential analysis report, dated June 15 of the current year, on whether the equipment should be leased or sold.

Pull Company Is Considering the Disposal of Equipment That Is