On January 2, 2008, Lucas Hospital purchased a $100,200 special radiology scanner from Faital Inc.

On January 2, 2008, Lucas Hospital purchased a $100,200 special radiology scanner from Faital Inc. The scanner has a useful life of 5 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 $105,500. Approximately one year later, the hospital is approached by Alliant Technology salesperson, Becky Bishop, who indicated that purchasing the scanner in 2008 from Faital Inc. was a mistake. She points out that Alliant has a scanner that will save Lucas Hospital $27,400 a year in operating expenses over its 4-year useful life. She notes that the new scanner will cost $120,900 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. Bishop agrees to buy the old scanner from Lucas Hospital for $30,000.