Question

Do you believe healthcare organizations should depreciate their building and equipment? Epxplain, why or why not.

Answer 1

The healthcare organisations incur the expenditures to configure the health care system. These costs are recovered over the time. The fixed assets have long life and accordingly depreciated over the time period. The equipments value is lost with the passing time and is depreciated. The land and value appreciate but these do not appear in the financial statements. Therefore, the land and buildings cannot be depreciated.

The deduction of depreciation expenses gives a clear picture of the income earned from those assets. The expenses are recovered from the government grants, charity, patient payers etc by the health care organisations. The organisational profitability will reflect a true picture if the required assets are depreciated each year.