HEALTHCARE FINANCE CASE STUDY #3 SLO 7: Understand depreciation expense and the

Question

HEALTHCARE FINANCE

CASE STUDY #3

SLO 7: Understand depreciation expense and the methods used to calculate depreciation

DuPage Hospital purchased an endoscope cleaner at a cost of $18,000 on January 1, 2018. DuPage expected the machine to have a salvage value of $2,000 at the end of its 4-year useful life.

Instructions

Prepare a depreciation schedule using the straight-line method. Be sure to use EXCEL and include columns for accumulated depreciation and net book value. INCLUDED EXCEL FORMULAS AS WORK MUST SHOW FORMULAS.

Explanation / Answer

Depreciation expense= (cost - salvage value)/useful life= (18000-2000)/4= 4000 per year

Depreciation schedule:

Particulars Gross book value Accummulated depreciation opening Depreciation expense Accummulated depreciation closing Net book value A=18000 B C=4000 D=B+C E=A-D 31-Dec-18 18000 0 4000 4000 14000 31-Dec-19 18000 4000 4000 8000 10000 31-Dec-20 18000 8000 4000 12000 6000 31-Dec-21 18000 12000 4000 16000 2000

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