Bullwinkle Company owns a equipment with a cost of $367,200 and accumulated depreciation of $54,100 that can be sold for $277,400, less a 5% sales commission. Alternatively, Bullwinkle Company can lease the equipment to another company for three years for a total of $288,900, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the equipment would total $16,200 over the three years. Prepare a differential analysis on March 23 as to whether Bullwinkle Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23 Lease Equipment (Alternative 1) Sell Equipment (Alternative 2) Differential Effect on Income (Alternative 2) Revenues $fill in the blank 83e0dafc0fa2fd6_1 $fill in the blank 83e0dafc0fa2fd6_2 $fill in the blank 83e0dafc0fa2fd6_3 Costs fill in the blank 83e0dafc0fa2fd6_4 fill in the blank 83e0dafc0fa2fd6_5 fill in the blank 83e0dafc0fa2fd6_6 Income (Loss) $fill in the blank 83e0dafc0fa2fd6_7 $fill in the blank 83e0dafc0fa2fd6_8 fill in the blank 83e0dafc0fa2fd6_9 Should Bullwinkle Company lease (Alternative 1) or sell (Alternative 2) the equipment?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1BE: Lease or sell Plymouth Company owns equipment with a cost of 600,000 and accumulated depreciation of...

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Bullwinkle Company owns a equipment with a cost of $367,200 and accumulated depreciation of $54,100 that can be sold for $277,400, less a 5% sales commission. Alternatively, Bullwinkle Company can lease the equipment to another company for three years for a total of $288,900, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the equipment would total $16,200 over the three years.

Prepare a differential analysis on March 23 as to whether Bullwinkle Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2)
March 23
	Lease Equipment (Alternative 1)	Sell Equipment (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank 83e0dafc0fa2fd6_1	$fill in the blank 83e0dafc0fa2fd6_2	$fill in the blank 83e0dafc0fa2fd6_3
Costs	fill in the blank 83e0dafc0fa2fd6_4	fill in the blank 83e0dafc0fa2fd6_5	fill in the blank 83e0dafc0fa2fd6_6
Income (Loss)	$fill in the blank 83e0dafc0fa2fd6_7	$fill in the blank 83e0dafc0fa2fd6_8	fill in the blank 83e0dafc0fa2fd6_9

Should Bullwinkle Company lease (Alternative 1) or sell (Alternative 2) the equipment?

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