Lahart Family Care Inc. is a large ambulatory care center that provides comprehensive $24-$hour

primary and specialty care to a large suburban population in Pennsylvania. The center recently

purchased new clinical laboratory equipment for $$2\mathrm{.}4$ million and spent $$102,000$ to renovate a center

room to accommodate the new equipment. The useful life of the equipment is estimated to be nine

years, after which it can be sold for $$90,000.$ Johnson uses a straight$-$line method to calculate book

depreciation and pays tax at a rate of $27$ percent. The equipment falls into the MACRS seven$-$year class.

a$.$ What annual depreciation expense will be reported on the income statement for the center?

b$.$ What annual depreciation expense will be reported for tax purposes?

c$.$ Suppose Johnson sells the laboratory equipment at the end of Year $5$ for $$400,000.$ What impact

would this have on the taxes paid by the center?