Inventory Concept and Depreciation Methods

Scenario:

As a Practice Manager for Dr. Smith and Dr. Brown, you are tasked with preparing a report that illustrates your knowledge of computing inventory and depreciation methods. After analyzing Dr. Smith and Dr. Brown’s Financial Statements, and performing the necessary calculations, you will decide on the feasibility of purchasing the equipment based on your computations and analysis of the financial statements. In addition, you will explain the rationale for your choice and make a recommendation for the practice.

Download and complete the Inventory Concept and Depreciation Methods Template. You will need to ensure that your responses are thorough and written in your own words; give examples as required and list references in APA format in the space provided within the template. When completed, the document will be at least eight pages in length. With that said, the items below illustrate the required components to be completed. NOTE: Information to calculate inventory and depreciation is included in the Inventory Concept and Depreciation Methods Template.

Part 1:  Inventory Concept and Calculations

• Discuss the inventory concept
• List an example of an inventory item and discuss how the item moves from inventory to COGS (Costs of Goods Sold). Include information on the meaning of COGS.
• Calculate the cost of ending inventory and COGS using the information provided within the template.
  • FIFO
  • LIFO
  • WEIGHTED-AVERAGE

Part 2: Define the Five Methods for Computing Book Depreciation

• Define each of the following methods for computing book depreciation:
  • Straight Line Depreciation Method
  • Accelerated Book Depreciation: Sum of Years’ Digits (SYD) Method
  • Accelerated Book Deprecation: Double Declining Balance (DDB) Method
  • Accelerated Book Deprecation: 150% Declining Balance Method

Part 3: Calculating Depreciation

• Calculate depreciation for three of the depreciation methods identified in the template.
  • Example of Straight Line Depreciation Method
  • Example of Accelerated Book Depreciation: SYD Method
  • Example of Accelerated Book Deprecation: DDB Method

Part 4: Analysis of Depreciation Methods

• Explain which method would be more feasible for healthcare organizations to use
  • Hospital
  • Physician practice
• Explain why it is important for a healthcare organization or physician practice to use a depreciation method.

Part 5:  Recommendation

• What is the depreciation method you would recommend to Dr. Smith and Dr. Brown to purchase the fixed asset? Explain the rationale for your choice.

Paper Requirements:
The Inventory Concept and Depreciation Methods Assignment template, once completed,

• Should demonstrate an understanding of the reading assignments, class discussions, your own research, and the application of new knowledge.
• Must have substantive responses within the template and include complete sentences in paragraph format, including citations for each reference listed. Refer to the Ashford Writing Center (Links to an external site.) for information on APA Style (Links to an external site.).
• Must use at least one scholarly source from the Ashford Library in addition to the course text.
  • The Scholarly, Peer Reviewed, and Other Credible Sources (Links to an external site.) table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.
• Must cite any information used from sources in APA style as outlined in the Ashford Writing Center’s Citing Within Your Paper (Links to an external site.) For further assistance with the formatting and the title page, refer to APA Formatting for Word 2013 (Links to an external site.).
• Must utilize academic voice. See the Academic Voice (Links to an external site.) resource for additional guidance.
• Must include references within the space provided in the template. Reference must be formatted according to APA style as outlined in the Ashford Writing Center. See the Formatting Your References List (Links to an external site.) resource in the Ashford Writing Center for specifications.

Carefully review the Grading Rubric (Links to an external site.) for the criteria that will be used to evaluate your assignment.