ACCT 6311-Assume a company has equipment with a book
by | Mar 18, 2020 | Uncategorized
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1. Assume a company has equipment with a book value of $50,000. The Company can sell the equipment through a broker for $90,000 less a 4% commission fee. Alternatively, the Company could lease the equipment to another party for 3 years at a price of $130,000. At the end of the three years, the equipment is expected to have no residual value (book value of $0). If the equipment is leased, the Company will incur total estimated expenses of $12,000 for the three years for maintenance, insurance and taxes.
What is the differential net income?
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$31,600
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$86,400
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$40,000
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$12,000
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2. A company manufactures a product (A) for a total production cost of $13,000, which can be sold for $50,000. The company has the option to process this product further to create product B for anadditional cost of $10,000. Product B can be sold for $58,000. What is thedifferential cost between these two options?
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$37,000
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$8,000
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$10,000
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$2,000
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