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Lease or Sell Casper Company owns equipment with a cost of $362,300 and accumulated depreciation...

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Accounting

Lease or Sell

Casper Company owns equipment with a cost of $362,300 and accumulated depreciation of $52,400 that can be sold for $277,000, less a 4% sales commission. Alternatively, Casper Company can lease the equipment for three years for a total of $288,000, 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 $16,400 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 Equipment (Alternative 1) Sell Equipment (Alternative 2) Differential Effects (Alternative 2)
Revenues $ $ $
Costs
Profit (Loss) $ $ $

b. Should Casper Company lease (Alternative 1) or sell (Alternative 2) the equipment?

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