Exercise 21-13 (Part Level Submission) On January 2, 2016, Twilight Hospital pur

Question

Exercise 21-13 (Part Level Submission) On January 2, 2016, Twilight Hospital purchased a $103,200 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 $105,000. 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 $24,000 a year in operating expenses over its 3-year useful life. Jacob notes that the new scanner will cost $110,000 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 $57,000 (a) Your answer is correct. If Twilight Hospital sells its old scanner on January 2, 2017, compute the gain or loss on the sale. Loss on sale 20,400

Explanation / Answer

Retain Repalace Net income Scanner Scanner increase (decrease) Annual operating cost 315000 243000 72000 New scanner cost 0 110,000 -110,000 old scanner salvage 0 -57,000 57,000 total 315000 296000 19000 Yes Annual operating costs is for three years

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