HAC Healthcare Fixed Assets & Depreciation

Question 1

Which depreciation method allocates an equal amount of expense each year over an asset's useful life?

Accepted Answer

Straight-line

Answer

Double-declining balance

Answer

Sum-of-years-digits

Answer

Units of production

Question 2

Under GAAP, which of the following costs is expensed rather than capitalized as part of a fixed asset's cost?

Accepted Answer

Staff training costs

Answer

Purchase price

Answer

Installation costs

Answer

Transportation and delivery costs

Question 3

A hospital purchases an MRI machine for $2,000,000 with a 10-year useful life and $200,000 salvage value. What is the annual straight-line depreciation?

Accepted Answer

$180,000

Answer

$200,000

Answer

$220,000

Answer

$160,000

Question 4

Which term describes the minimum dollar amount at which an expenditure is recorded as a fixed asset rather than an immediate expense?

Accepted Answer

Capitalization threshold

Answer

Useful life threshold

Answer

Depreciation floor

Answer

Medicare capital limit

Question 5

The Modified Accelerated Cost Recovery System (MACRS) is primarily used for which purpose in healthcare accounting?

Accepted Answer

Federal income tax depreciation

Answer

GAAP financial reporting

Answer

Medicare cost reports

Answer

Medicaid reimbursement calculations

Question 6

Which agency establishes useful life guidelines for healthcare equipment used in Medicare cost reports?

Accepted Answer

Centers for Medicare & Medicaid Services (CMS)

Answer

IRS

Answer

FASB

Answer

AICPA

Question 7

When a hospital receives a government grant to purchase equipment, the preferred GAAP treatment is to:

Accepted Answer

Record the grant as deferred revenue and amortize it over the asset's life

Answer

Record the grant as immediate revenue

Answer

Reduce the asset's cost by the grant amount

Answer

Expense the full grant in the period received