1.6 Keating Co. is considering disposing of equipment with a cost of $63,000 and accumulated depreciation...

1.6 Keating Co. is considering disposing of equipment with a cost of $63,000 and accumulated depreciation of $44,100. Keating Co. can sell the equipment through a broker for $30,000, less a 10% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 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

Use this information for Falcon Co. to answer the question that follow.

10.1 Falcon Co. produces a single product. Its normal selling price is $30 per unit. The variable costs are $19 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1 per unit would be eliminated.

If the order is accepted, what would be the impact on net income?

180. When a segment of a company is showing a net loss, it is always best to discontinue the segment in order not to continue with losses.

True

False

Expert Solution

180. False, it is not always best to discontinue the segment if it is showing net loss. Sometimes it is better to keep the segment if it is having positive contribution. ie, atleast variable cost is getting covered. or evn continue the business if it is covering minimum to the extend of avoidable fixed cost.still it is a positive sign that the business loss is reduced to the minimum

ekkarill92 answered 1 year ago

19. Keating Co. is considering disposing of equipment that cost $60,000 and has $42,000 of accumulated...

19. Keating Co. is considering disposing of equipment that cost $60,000 and has $42,000 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $29,000 less a 5% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $48,000. Keating will incur repair, insurance, and property tax expenses estimated at $12,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net...

Smith Co. sold equipment that had cost $8,000 and had accumulated depreciation of $6,700. The sale...

Smith Co. sold equipment that had cost $8,000 and had accumulated depreciation of $6,700. The sale price for the equipment was $2,000. The entry to record the sale will include a a. debit to Equipment for $8,000 b. credit to Accumulated Depreciation, Equipment, for $6,700 c. credit to Cash for $2,000 d. credit to Gain on Sale of Equipment for $700 Assuming that inventory costs have been rising throughout the period, use of the LIFO inventory method will produce a...

41. Smith Co. sold equipment that had cost $8,000 and had accumulated depreciation of $6,700. The...

41. Smith Co. sold equipment that had cost $8,000 and had accumulated depreciation of $6,700. The sale price for the equipment was $2,000. The entry to record the sale will include a a. debit to Equipment for $8,000 b. credit to Accumulated Depreciation, Equipment, for $6,700 c. credit to Cash for $2,000 d. credit to Gain on Sale of Equipment for $700 42. Kinder Co. purchased a car for $25,000, with an estimated useful life of 5 years and a...

Equipment that cost $594000 and has accumulated depreciation of $270000 is exchanged for equipment with a...

Equipment that cost $594000 and has accumulated depreciation of $270000 is exchanged for equipment with a fair value of $432000 and $108000 cash is received. The exchange lacked commercial substance. The new equipment should be recorded at: *Please show all work** The answer is $259,200 but not sure how to get it

Equipment that cost $398,100 and has accumulated depreciation of $318,900 is exchanged for equipment with a...

Equipment that cost $398,100 and has accumulated depreciation of $318,900 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. The exchange lacked commercial substance. (a) Calculate the gain to be recognized from the exchange. Gain recognized $

Equipment with an original cost of $51,422 and accumulated depreciation of $33,306 was sold at a...

Equipment with an original cost of $51,422 and accumulated depreciation of $33,306 was sold at a loss of $5,155. As a result of this transaction, cash would a.increase by $12,961 b.increase by $51,422 c.decrease by $5,155 d.decrease by $33,306

Historical cost of equipment is $27,000. Calculate depreciation expense, accumulated depreciation, and book value for two...

Historical cost of equipment is $27,000. Calculate depreciation expense, accumulated depreciation, and book value for two years. Useful life is 4 years.

Journal Entries Jan 1 Equipment with a historical cost of $10,000 and an accumulated depreciation of...

Journal Entries Jan 1 Equipment with a historical cost of $10,000 and an accumulated depreciation of $3,000 was sold for $6,000 Jan 2 Equipment with a historical cost of $20,000 and an accumulated depreciation of $18,000 was disposed of with an additional disposal cost of $1,300. Jan 2 Sanford Company borrowed $24,000 on a short-term discounted 90 day, 3.0% noninterest-bearing note payable. Jan 3 Sanford Company paid $18,000 in advance for the 6 month rental of a warehouse. Jan 3...

Lease or Sell Kincaid Company owns equipment with a cost of $363,300 and accumulated depreciation of...

Lease or Sell Kincaid Company owns equipment with a cost of $363,300 and accumulated depreciation of $56,600 that can be sold for $275,700, less a 3% sales commission. Alternatively, Kincaid Company can lease the equipment for three years for a total of $288,500, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Kincaid Company on the equipment would total $16,500 over the three year lease....

Tamarisk Manufacturing has old equipment that cost $58,000. The equipment has accumulated depreciation of $27,200. Tamarisk...

Tamarisk Manufacturing has old equipment that cost $58,000. The equipment has accumulated depreciation of $27,200. Tamarisk has decided to sell the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) What entry would Tamarisk make to record the sale of the equipment for $32,000 cash? (b) What entry would Tamarisk make to record the sale...

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