HAC Healthcare Fixed Assets & Depreciation 3

Question 1

Under Medicare cost reporting, which of the following is NOT classified as a capital-related cost?

Accepted Answer

Operating room supply costs

Answer

Depreciation on buildings and equipment

Answer

Interest on capital indebtedness

Answer

Capital equipment lease costs

Question 2

A change in the estimated useful life of a depreciable healthcare asset is accounted for as:

Accepted Answer

A change in accounting estimate applied prospectively

Answer

A change in accounting principle requiring retrospective restatement

Answer

An error correction requiring a prior period restatement

Answer

A cumulative-effect adjustment recorded in retained earnings

Question 3

Which of the following items would NOT typically appear in a healthcare organization's fixed asset register?

Accepted Answer

Patient utilization statistics per procedure

Answer

Asset acquisition date

Answer

Original cost and accumulated depreciation

Answer

Asset location and responsible department

Question 4

The 'half-year convention' in depreciation means that:

Accepted Answer

All assets acquired or disposed of during the year receive only a half-year of depreciation in that year

Answer

Depreciation is only calculated in the second half of the year

Answer

Assets are fully depreciated at the midpoint of their useful life

Answer

Depreciation pauses for six months after acquisition

Question 5

A hospital performs a periodic physical inventory of its fixed assets primarily to:

Accepted Answer

Verify the asset register is accurate and identify ghost or missing assets

Answer

Recalculate depreciation expense

Answer

Determine Medicare capital cost reimbursement rates

Answer

Set annual property insurance premiums

Question 6

When a healthcare organization renovates an existing building, which costs should be capitalized rather than expensed?

Accepted Answer

Costs that extend the useful life or significantly increase capacity

Answer

Routine painting and minor patching

Answer

Replacing light bulbs and HVAC filters

Answer

Annual janitorial and cleaning services

Question 7

Which of the following best describes the purpose of recording accumulated depreciation as a separate contra-asset rather than directly reducing the asset account?

Accepted Answer

It preserves the original cost information on the balance sheet while showing the portion consumed

Answer

It reduces income tax liability more efficiently

Answer

It is required only for Medicare cost reporting purposes

Answer

It allows the asset to be revalued upward in future periods