Kincaid Company owns equipment with a cost of $364,100 and accumulated depreciation of $53,600 that can be soldfor $273,400, less a 4% sales commission. Alternatively, Kincaid Company can lease the equipment for 3 years for atotal of $287,600, at the end of which there is no residual value. In addition, the repair, insurance, and property taxexpense that would be incurred by Kincaid Company on the equipment would total $14,900 over the 3-year lease.a. Prepare a differential analysis on October 29 as to whether Kincaid Company should lease (Alternative 1) or sell(Alternative 2) the equipment. If required, use a minus sign to indicate a loss.Differential AnalysisLease Equipment (Alt. 1) or Sell Equipment (Alt. 2)October 29LeaseSellDifferentialLine Item DescriptionEquipmentEquipment(Alternative 1)(Alternative 2)Effects(Alternative 2)<RevenuesCosts287,600 $ 273,400$14,20014,900Profit (Loss)272,700XFeedbackCheck My WorkSubtract the lease costs from the lease revenues. Subtract the sell equipment costs from the sell equipmentrevenues. Determine the differential effect on income of the revenues, costs, and income (loss) by subtractingalternative 1 from alternative 2.

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Answered: Kincaid Company owns equipment with a…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 44P

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