Question
On January 2, 2022, Hallah Hospital purchased a P100,000 special radiology scanner from Salan Inc. The scanner has a useful life of 5 years and
On January 2, 2022, Hallah Hospital purchased a P100,000 special radiology scanner from Salan Inc. The scanner has a useful life of 5 years and will have no salvage value at the end of its useful life. The straight line method of depreciation is used on this scanner. Annual operating costs are P105,000. Approximately one year later, the hospital is approached by Alliance Technology saying that purchasing a scanner from Salan Inc. was a mistake. They pointed out that Alliance has a scanner that will save UMH P27,000 a year in operating expenses over its 9-year remaining useful life. They noted that the new scanner will cost P120,000 and has the same capabilities as the one purchased last year.
- Determine if Halah should purchase the new scanner on January 2, 2023.
- Assuming that a smaller hospital offered to purchase the old scanner for P30,000, what is the gain or loss on the sale of the old machine. Will the decision to retain or replace the scanner remains the same?
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