On January 2, 2021, Blue Spruce Hospital purchased a $109,000 special radiology scanner from Marx Inc....

  

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On January 2, 2021, Blue Spruce Hospital purchased a $109,000 special radiology scanner from Marx Inc. The scanner has a useful life of five years and will 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 $104,400. Approximately one year later, the hospital is approached by Novak Technology salesperson Sandra Robinson, who indicates that purchasing the scanner in 2021 from Marx was a mistake. She points out that Novak has a scanner that will save Blue Spruce Hospital $25,200 a year in operating expenses over its four-year useful life. She notes that the new scanner will cost $119,000 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. Novak agrees to buy the old scanner from Blue Spruce Hospital for $61,100. Assume Blue Spruce Hospital sells its old scanner on January 2, 2022. Calculate the gain or loss on the sale. If Blue Spruce Hospital sells its old scanner it incurs a ✓ gain loss of $ Using incremental analysis, determine whether Blue Spruce Hospital should purchase the new scanner on January 2, 2022. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Operating cost New scanner cost Old scanner salvage Total Blue Spruce Hospital $ LA Retain Scanner LA Replace Scanner V purchase the new scanner. $ tA Net Income Increase (Decrease) On January 2, 2021, Blue Spruce Hospital purchased a $109,000 special radiology scanner from Marx Inc. The scanner has a useful life of five years and will 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 $104,400. Approximately one year later, the hospital is approached by Novak Technology salesperson Sandra Robinson, who indicates that purchasing the scanner in 2021 from Marx was a mistake. She points out that Novak has a scanner that will save Blue Spruce Hospital $25,200 a year in operating expenses over its four-year useful life. She notes that the new scanner will cost $119,000 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. Novak agrees to buy the old scanner from Blue Spruce Hospital for $61,100. Assume Blue Spruce Hospital sells its old scanner on January 2, 2022. Calculate the gain or loss on the sale. If Blue Spruce Hospital sells its old scanner it incurs a ✓ gain loss of $ Using incremental analysis, determine whether Blue Spruce Hospital should purchase the new scanner on January 2, 2022. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Operating cost New scanner cost Old scanner salvage Total Blue Spruce Hospital $ LA Retain Scanner LA Replace Scanner V purchase the new scanner. $ tA Net Income Increase (Decrease)

Answer rating: 100% (QA)

Cost of old scanner Less Depreciation Book value of ... View the full answer