Question

On January 2, 2016, Blue Hospital purchased a $96,400 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 Blue Hospital $25,000 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 Blue Hospital for $45,500. (a) Your answer is correct.

C Exercise 20-13 (Part Level S + V - O X 6 5 WileyPLUS x C I Cant Figure Out Why The C Exercise 20-13 (Part Level S E = 0 @ @ https://edugen.wileyplus.com/edugen/student/mainfr.uni Home Read, Study & Practice Assignment Gradebook ORION Downloadable eTextbook O ☆ ... Assignment > Open Assignment BACK NEXT CALCULATOR FULL SCREEN PRINTER VERSION RECIPO.LV - upcu (b) Prepare an incremental analysis of Blue 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) ASSIGNMENT RESOURCES CH 12 - Problem Challenge Practice Question 11 Practice Question 13 Practice Question 15 Practice Question 18 Practice Question 19 Exercise 12-9 (Part Level Submission) Exercise 12-10 (Part Level Submission) Exercise 12-13 (Part Level Submission) Problem 12-4 (Part Level Submission) Waterways Continuing Problem 12 (Part 1) (Part Level Submission) Practice Question 38 Practice Question 40 Annual operating costs $ New scanner cost Old scanner salvage Total Should Blue Hospital purchase the new scanner on January 2, 2017? Review Score Review Results by Study Objective Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT License Agreement | Privacy Policy | © 2000-2019 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc. Version 4.24.17.1 O Type here to search ORA O ax 5:40 PM 11/29/20193

Answer 1

Solution:

	Retain Scanner	Replace Scanner	Net Income Increase (decrease)
Annual Operating Costs (Costs*5 years)	$3,18,000	$2,43,000	$75,000
New Scanner cost	$0	$1,10,000	-$1,10,000
Old Scanner Salavage	$0	-$45,500	$45,500
Total	$3,18,000	$3,07,500	$10,500

yes, Blue hospital should purchase the new scanner.