Final answer:
The difference between replacement cost depreciation and historical cost depreciation for an MRI scanner, after two years, is $400,000. Historical cost depreciation would be $800,000 while replacement cost depreciation would be $1.2 million.
Step-by-step explanation:
The question involves calculating the difference in depreciation using historical cost vs replacement cost for an MRI scanner. Historical cost depreciation is computed based on the original purchase price of the asset, while replacement cost depreciation would be based on the current cost to replace the asset.Historical cost depreciation for the MRI scanner would be the original purchase price of $2.0 million divided by its depreciable life of 5 years, resulting in an annual depreciation of $400,000. Since the scanner was purchased two years ago, the accumulated depreciation would be $800,000 (2 years * $400,000 per year).
Replacement cost depreciation would be based on the current replacement cost of $3.0 million divided by the same depreciable life of 5 years, giving an annual depreciation of $600,000. After two years, the accumulated replacement cost depreciation would be $1.2 million (2 years * $600,000 per year).The difference between the replacement cost depreciation and historical cost depreciation after two years is $1.2 million (replacement cost) - $800,000 (historical cost) = $400,000.