Burlington Construction Company is considering selling excess machinery with a book value of $280,500 (original cost of $398,800 less accumulated depreciation of $118,300) for $275,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,200 for five years, after which it is expected to have no residual value. During the period of the lease, Burlington Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,800. a. Prepare a differential analysis dated January 15 to determine whether Burlington Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss.
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Burlington Construction Company is considering selling excess machinery with a book value of $280,500 (original cost of $398,800 less
accumulated depreciation of $118,300) for $275,900, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $283,200 for five years, after which it is expected to have no residual value. During the period of the lease, Burlington Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,800.Differential AnalysisLease (Alt. 1) or Sell (Alt. 2) MachineryJanuary 15a. Prepare a differential analysis dated January 15 to determine whether Burlington Construction Company should lease (Alternative 1) or sell (Alternative 2) the machinery. If required, use a minus sign to indicate a loss.
Lease
Machinery
(Alternative 1)Sell
Machinery
(Alternative 2)Differential
Effects
(Alternative 2)Revenues $fill in the blank 0e8800fac01dfcd_1 $fill in the blank 0e8800fac01dfcd_2 $fill in the blank 0e8800fac01dfcd_3 Costs fill in the blank 0e8800fac01dfcd_4 fill in the blank 0e8800fac01dfcd_5 fill in the blank 0e8800fac01dfcd_6 Profit (Loss )$fill in the blank 0e8800fac01dfcd_7 $fill in the blank 0e8800fac01dfcd_8 $fill in the blank 0e8800fac01dfcd_9 b. On the basis of the data presented, would it be advisable to lease or sell the machinery?
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