Assume the same facts as in Exercise 22-18, except that a different hospital, City Hospital, is a taxpaying entity. The income tax rate is 30% for all transactions that affect income taxes.
REQUIRED
1. Do requirement 1 of Exercise 22-18.
2. How would your computations in requirement 1 be affected if the special-purpose machine had a $10,000 terminal disposal value at the end of ten years? Assume depreciation deductions are based on the $110,000 purchase cost and zero terminal disposal value using the straight-line method. Answer briefly in words without further calculations.