Keating net differential effect on income

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Reference no: EM131317595

Keating Co. is considering disposing of an equipment with a cost of $50,000 and accumulated depreciation of $40,000. Keating Co. can sell the equipment through a broker for $25,000, less a 5% broker commission. Alternatively, Gunner Co. has offered to lease the equipment from Keating for five years for a five year total of $48,750. Keating will incur repair, insurance, and property tax expenses estimated at $8,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. Keating's net differential effect on income from the five year lease alternative is

  • $17,000
  • $7,000
  • $27,000
  • $14,500

Reference no: EM131317595

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