Depreciation, Intangible Assets, And Valuing Goodwill Essay

1642 Words Jun 5th, 2016 7 Pages
Depreciation has been an encompassing part of accounting and cash flow assumptions are a main part of the financial statement. The periodic inventory system is a something to consider with recording inventory and reducing waste. Another topic to bring to light is goodwill and intangible assets for health care organizations. There are various ways for depreciation to be measured and determined based off the organizations finances. Much can be said about depreciation, intangible assets, and valuing goodwill. How all these aspects relate within the health care organization have a considerable impact on the financial statement and organization.
Depreciating Assets
In health care organizations, the way to depreciate assets over their useful lives instead expensing them over the year they are acquired is justifiable. When an asset is depreciated overall a period longer or shorter, than its useful life there is no obtainable accurate match between revenues and expenses. It then turns out for accountant’s who use (GAAP) estimate a shorter useful life. An estimated useful life of equipment lasts a good amount of time. Nevertheless, the writing off an asset too fast can result in understating its real value as opposed to writing it off too slowly. Therefore, expecting a longer life than overall the results would overstate its value. Depreciation straight-line and accelerated methods are the common methods to use for in the health care organization to determine the useful life of…

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