Question

On January 2, 2019, Twilight Hospital purchased a $96,400 special radiology scanner from Crane 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 2019 from Crane Inc. was a mistake. He points out that Dyno has a scanner that will save Twilight 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 Twilight Hospital for $45,500.
Prepare an incremental analysis of Twilight Hospital.

Answer 1

• The preparation of the incremental analysis of Twilight hospital is presented below:

Particulars      Retain scanner    Replace scanner    Net income

Annual

operating cost   $318,000            $243,000              $75,000

             ($106,000 × 3)                                        ($25,000 × 3)

New

scanner cost                                      $110,000        -$110,000

Old scanner salvage                          -$45,500        $45,500

Total                             $318,000      $307,500      $10,500

In this way, the incremental analysis should be prepared.

Learn more about the salvage value here: brainly.com/question/15711481