Burlington Construction Company is considering selling excess machinery with a book value of
$original cost of $ less accumulated depreciation of $ for $ less
a brokerage commission. Alternatively, the machinery can be leased for a total of $ 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 $
a Prepare a differential analysis dated January to determine whether Burlington Construction
Company should lease Alternative or sell Alternative the machinery. If required, use a
minus sign to indicate a loss.
Differential Analysis
Lease Alt or Sell Alt Machinery
January
b On the basis of the data presented, would it be advisable to lease or sell the machinery?
