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In this incremental analysis video, Ill cover the basic analysis for retain or replace equipment. On January 2nd, County Hospital purchased a $100,000 special radiology scanner from West Inc. The scanner had a useful life of four years with no disposal value. The straight line method of depreciation is used. Annual operating costs are 105,000. Approximately one year later, the hospital is approached by a Smith Tech salesperson who indicated that purchasing the scanner in 2017 was a mistake. She points out that Smith has a scanner that will save the hospital 30,000 a year in operating expenses over its three-year useful life. The new scanner will cost 110,000 and has the same capabilities as the scanner purchased last year. The new scanner will have no disposal value, but Smith Tech agrees to buy the old scanner from County Hospital for $40,000. So the first thing were going to look at, is if County Hospital sells its old scanner on January 2nd, 2018, what is the gain or the loss o
