Question

Health Care Finance: Basic Tools For Nonfinancial Managers, Fifth Edition Judith J. Baker, R.W. Baker, and Neil R. Dworkin Assignment Exercise 11-3 Assignment Exercise 11-3 Assignment Exercise 11-3: Components of Balance Sheet and Income Statement Refer to the Metropolis Health System (MHS) balance sheet and statement of revenue and expense in the MHS Case Study appearing in Chapter 33. Property, plant, and equipment of $19,300,000 is shown as “net,” meaning net of the reserve for depreciation. If the $19,300,000 is reduced by $200,000 (meaning the reserve for depreciation has risen), what happens on the income statement?

Answer 1

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Reduction in net value of Property plant and equipment means the depreciation has increased. This will result into increase in expenses in income statement and therefore reduction in net income.

Impact on income statemnet = Expenses will increase by 300000