Lease or Sell Casper Company owns equipment with cost of $366,500 and accumulated depreciation of $53,400 that can be sold for $277,300, less a 3% sales commission. Alternatively, Casper Company can lease the equipment for three years for a total of $287,100, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Casper Company on the equipment would total $15,900 over the three year lease. a. Prepare a differential analysis on August 7 as to whether Casper Company should lease (Alternative 1) or sell (Alternative 2) the equipment. If required, use a minus sign to indicate a loss. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) August 7 Lease Sell Differential Equipment (Alternative 1) (Alternative 2) (Alternative 2) Equipment Effects Revenues Costs Profit (Loss) b. Should Casper Company lease (Alternative 1) or sell (Alternative 2) the equipment?

Lease or Sell Casper Company owns equipment with cost of $366,500 and accumulated depreciation of $53,400 that can be sold for $277,300, less a 3% sales commission. Alternatively, Casper Company can lease the equipment for three years for a total of $287,100, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Casper Company on the equipment would total $15,900 over the three year lease. a. Prepare a differential analysis on August 7 as to whether Casper Company should lease (Alternative 1) or sell (Alternative 2) the equipment. If required, use a minus sign to indicate a loss. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) August 7 Lease Sell Differential Equipment (Alternative 1) (Alternative 2) (Alternative 2) Equipment Effects Revenues Costs Profit (Loss) b. Should Casper 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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Duncan Company owns a machine with a cost of $308,440 and accumulated depreciation of $63,270 that can be sold for $264,500 less a 6% sales commission. Alternatively, Duncan Company can lease the machine to another company for three years for a total of $276,490, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Duncan Company on the machine would total $24,440 over the three years. Required: 1. Prepare a differential analysis on February 21 as to whether Duncan Company should lease (Alternative 1) or sell (Alternative 2) the machine. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter “0”. A colon (:) will automatically appear if required. 2. Should Duncan Company lease (Alternative 1) or sell…
Lease or Sell Casper Company owns equipment with a cost of $366,800 and accumulated depreciation of $54,900 that can be sold for $277,500, less a 5% sales commission. Alternatively, Casper Company can lease the equipment for three years for a total of $288,100, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Casper Company on the equipment would total $15,800 over the three year lease. a. Prepare a differential analysis on February 18, as to whether Casper Company should lease (Alternative 1) or sell (Alternative 2) the equipment. Differential Analysis Lease (Alt. 1) or Sell (Alt. 2) Equipment February 18 Lease Equipment(Alternative 1) Sell Equipment(Alternative 2) Differential Effecton Income(Alternative 2) Revenues Costs Income (Loss) b. Should Casper Company lease (Alternative 1) or sell (Alternative 2) the equipment?
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