Inventory Concept and Depreciation Methods
[WLOs: 1, 2] [CLOs: 1, 2, 3, 4, 5]
Prior to beginning work on this assignment, review Chapter 9 of your textbook. Additionally, review the What Are the Methods of Depreciation? and the
Depreciation and Why it is Important to Your Business articles.
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 Writing Center for information on APA Style.