Differential Analysis for a Lease-or-Sell Decision
Differential Analysis for a Lease-or-Sell Decision
Rhombus Construction Company is considering selling excess machinery with a book value of $125,000 (original cost of $340,000 less
a. Prepare a differential analysis, dated May 25 to determine whether Rhombus 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 | Sell Machinery | Differential Effects | |
| (Alternative 1) | (Alternative 2) | (Alternative 2) | |
| Revenue | $ | $ | $ |
| Costs | |||
b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain.
The net ___ from selling is $
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