HAC Healthcare Fixed Assets & Depreciation 2

Question 1

The double-declining balance (DDB) method calculates annual depreciation by applying which rate to the asset's net book value?

Accepted Answer

Twice the straight-line rate

Answer

The straight-line rate

Answer

150% of the straight-line rate

Answer

The MACRS recovery rate

Question 2

A hospital disposes of medical equipment with a net book value of $50,000 for $30,000 cash. What is the financial statement impact?

Accepted Answer

Loss of $20,000

Answer

Gain of $20,000

Answer

No gain or loss is recognized

Answer

Revenue of $30,000

Question 3

Under ASC 360, an impairment loss on a long-lived healthcare asset is recognized when:

Accepted Answer

The carrying amount exceeds undiscounted future cash flows

Answer

Fair value exceeds the carrying amount

Answer

The asset reaches the end of its useful life

Answer

The asset's useful life is revised downward

Question 4

Under ASC 842, which type of lease requires the lessee to recognize a right-of-use asset and a lease liability on the balance sheet with interest and amortization recognized separately?

Accepted Answer

Finance lease

Answer

Operating lease

Answer

Short-term lease

Answer

Variable lease

Question 5

A hospital acquires a building for $5,000,000. The land is independently appraised at $500,000. What amount is subject to depreciation?

Accepted Answer

$4,500,000

Answer

$5,000,000

Answer

$5,500,000

Answer

$500,000

Question 6

Component accounting for healthcare facilities requires organizations to:

Accepted Answer

Depreciate significant components with different useful lives separately

Answer

Depreciate all building components as one unit

Answer

Apply a single useful life to the entire facility

Answer

Expense minor components as incurred regardless of cost

Question 7

Which depreciation method typically results in the highest depreciation expense in the first year of an asset's life?

Accepted Answer

Double-declining balance

Answer

Straight-line

Answer

Sum-of-years-digits

Answer

Units of production