Pennsylvania Code › Title 55 - HUMAN SERVICES › Part VI - Mental Health/Intellectual Disability/Autism Manual › Subpart C - Administration and Fiscal Management › Chapter 4300 - COUNTY MENTAL HEALTH AND INTELLECTUAL DISABILITY FISCAL MANUAL › CONTRACTED AGENCY ALLOWABLE COST STANDARDS › Section 4300.105 - Depreciation allowances

Current through Register Vol. 54, No. 28, July 13, 2024
The Department will participate in a usage payment for
						fixed assets which were not expensed to the Department or paid for with
						Departmental funds. To claim a depreciation allowance, the following conditions
						shall be met:
(1) The straight-line
					 method of depreciation shall be used. The amount of annual depreciation shall
					 be determined by first reducing the cost of the asset by a salvage value and
					 then dividing by the number of years of useful life of the asset. The useful
					 life may be shorter than the physical life depending upon the usefulness of the
					 particular asset to the provider. A useful life may not be less than the
					 relevant useful life published by the Internal Revenue Service or the Uniform
					 Chart of Accounts and Definitions for Hospitals published by the American
					 Hospital Association for the particular asset on which the depreciation is
					 claimed. Once the agency selects using the information published by the
					 Internal Revenue Service or the Uniform Chart of Accounts and Definitions for
					 Hospitals, it shall be consistently applied for assets.
(2) For the year of acquisition and the year
					 of disposal, the number of months of depreciation may not exceed the number of
					 months that the asset was in service.
(3) The method and procedure, including the
					 assigned useful lives, for computing depreciation shall be applied from
					 year-to-year on a consistent basis and may not be changed, even if the agency
					 is purchased as an ongoing operation.
(4) Assets shall be recorded at cost. Donated
					 assets shall be recorded at the current appraisal value. If an asset is
					 acquired by a trade-in, the cost of the new asset is the sum of the book value
					 of the old asset and cash or issuance of debt as consideration paid.
(5) Agencies that previously did not maintain
					 fixed asset records and did not record depreciation in prior years may be
					 reimbursed for straight-line depreciation of the remaining useful life of the
					 asset. The depreciation shall be based on the cost of the asset at the time of
					 original purchase. No depreciation may be taken on an asset that would have
					 been fully depreciated if it had been properly recorded at the time of
					 acquisition.
(6) Gains on the sale
					 of assets are considered to be equal to the salvage value which shall be
					 established prior to the sale of the item. Gains on the sale of assets shall
					 offset the agency's total depreciation expense for the last 12 months prior to
					 the date the asset was sold or retired from service. Losses incurred on the
					 sale or disposal of assets may be reimbursed.
(7) The cost basis for depreciable assets is
					 determined as follows:
(i) The cost basis for
					 assets acquired as used shall be computed as follows:
(A) The lower of the purchase price or the
					 fair market value shall be established at the time of sale based on the lowest
					 of two or more bona fide appraisals at the time of sale.
(B) Depreciation that was taken or could have
					 been taken by prior owners shall be subtracted.