Exercise 7-13 (Part Level Submission) On January 2, 2016, Twilight Hospital purc

Question

Exercise 7-13 (Part Level Submission) On January 2, 2016, Twilight Hospital purchased a $104,800 special radiology scanner from Bella Inc. The scanner had a useful life of 4 years and was estimated to have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $106,000 Approximately one year later, the hospital is approached by Dyno Technology salesperson, Jacob Cullen, who indicated that purchasing the scanner in 2016 from Bella Inc. was a mistake. He points out that Dyno has a scanner that will save Twilight Hospital $26,000 a year in operating expenses over its 3-year useful life. Jacob notes that the new scanner will cost $109,000 and has the same capabilities as the scanner purchased last year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. Jacob agrees to buy the old scanner from Twilight Hospital for $53,000 If Twilight Hospital sells its old scanner on January 2, 2017, compute the gain or loss on the sale Prepare an incremental analysis of Twilight Hospital. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Retain Scanner Replace Scanner Net Income Increase (Decrease) Operating costs New scanner cost Old scanner salvage Total Should Twilight Hospital purchase the new scanner on January 2, 2017?

Explanation / Answer

Purchase Date 02.01.2016 Purchase Value 104800 Less: Salvage Cost 0 Net Depreciable Value 104800 Useful Life 4 Depreciation PA 26200 A WDV at 02.01.2017 78600 Sales Value 53000 Loss on Sale of Scanner 25600 B Incremental Analysis of Twilight Hospital: Particulars Retain Scanner Replace Scanner Net Income Operating Costs 318000 240000 78000 Savings in 3 Years 26000*3 New Scanner Cost 109000 -109000 Purchase Value Old Scanner Salvage -53000 53000 Sales Value of Old Scanner Total 318000 296000 22000 Decision to Replace Scanner will lead to 22000 Savings C Yes it should Purchase

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.