Keating Co

question 158

Multiple Choice

Keating Co.is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date.Keating Co.can sell the equipment through a broker for $25,000 less 5% commission.Alternatively,Gunner Co.has offered to lease the equipment for five years for a 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.The net differential income from the lease alternative is

• A) $17,000
• B) $7,000
• C) $27,000
• D) $14,500

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Definitions:

James River

A significant river in Virginia, pivotal in the state's history and development, and serving as a key waterway for transportation and commerce.

Eastern Pennsylvania

A region in the Commonwealth of Pennsylvania, characterized by its rich historical importance, varied landscapes, and significant cultural and economic contributions to the state.

Sam Houston

An American soldier and politician, significant for his role in bringing Texas into the United States as a constituent state.

Texas's Secession

The act in 1861 when Texas declared its secession from the United States to join the Confederate States during the American Civil War.