QuestionJuly 20, 2025

A hospital buys a SuperScanner that costs 10,000,000 The hospital accountant was told that the SuperScanner is expected to last for 12 years One year later, the accountant learns that the SuperScanner life expectancy was incorrect, and that it will last only six years. The accountant should not change the depreciation schedule or amead the previous year's financial reports. True False

A hospital buys a SuperScanner that costs 10,000,000 The hospital accountant was told that the SuperScanner is expected to last for 12 years One year later, the accountant learns that the SuperScanner life expectancy was incorrect, and that it will last only six years. The accountant should not change the depreciation schedule or amead the previous year's financial reports. True False
A hospital buys a SuperScanner that costs 10,000,000 The hospital accountant was told that the SuperScanner is expected to last for 12 years One year later, the accountant learns that the SuperScanner life expectancy was incorrect, and that it will last only six years. The accountant should not change the depreciation schedule or amead the previous year's financial reports. True False

Solution
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Answer

True Explanation 1. Determine Depreciation Method Assume straight-line depreciation, where annual depreciation = \frac{\text{Cost}}{\text{Useful Life}}. 2. Calculate Initial Depreciation Initial useful life = 12 years. Annual depreciation = \frac{10,000,000}{12} = 833,333.33. 3. Adjust Useful Life New useful life = 6 years. Remaining book value after 1 year = 10,000,000 - 833,333.33 = 9,166,666.67. 4. Recalculate Depreciation for Remaining Years Remaining depreciation period = 5 years. New annual depreciation = \frac{9,166,666.67}{5} = 1,833,333.33. 5. Evaluate Statement The accountant should adjust future depreciation but not amend past reports, as per accounting standards.

Explanation

1. Determine Depreciation Method<br /> Assume straight-line depreciation, where annual depreciation = $\frac{\text{Cost}}{\text{Useful Life}}$.<br /><br />2. Calculate Initial Depreciation<br /> Initial useful life = 12 years. Annual depreciation = $\frac{10,000,000}{12} = 833,333.33$.<br /><br />3. Adjust Useful Life<br /> New useful life = 6 years. Remaining book value after 1 year = $10,000,000 - 833,333.33 = 9,166,666.67$.<br /><br />4. Recalculate Depreciation for Remaining Years<br /> Remaining depreciation period = 5 years. New annual depreciation = $\frac{9,166,666.67}{5} = 1,833,333.33$.<br /><br />5. Evaluate Statement<br /> The accountant should adjust future depreciation but not amend past reports, as per accounting standards.
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