Question

On January 2, 2016, Twilight Hospital purchased a $98,400 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 $111,000 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 $45,000. If Twilight Hospital sells its old scanner on January 2, 2017, compute the gain or loss on the sale. e Textbook and Media

Answer 1

Calculating profit / Loss on sale of old scanner $98,400 Cost Life = 4 years Depreciation per annum = 24,600 Book value on 2nd jan 2017 73,800 $45,000 Sale value of scanner = Loss $45000- $ 73800 $ 28800 Loss 28,800 Net income increase / (decrease) Particulars operating cost 318,000 $ 240,000$ New scanner Old scanner Replace Retain 78,000 $ 111,000 $(111,000) (45,000) $ $318,000$ 306,000 $ 45,000 Total 12,000 Purchase the new scanner >> Please provide feedback with UP VOTE