Client MemoEssay Preview: Client MemoReport this essayTo: ClientFrom: AccountantRef: Client QuestionsDear Client,I have received a list of concerns about information we have requested to support the current financial reporting engagement. I have evaluated your questions and respectively provide the following information to explain the purpose for our requests.
Lower of Cost or MarketInventory values should most closely represent their replacement cost (Schroeder, Clark, & Cathey, 2011). Accounting principles dictate reporting inventory at the lower of cost or market. To report properly the inventory value on the financial statements, we will evaluate the inventory cost compared to market value. The financial statements report inventory at the lower of cost or market. Economic and market changes can affect the value of inventory on hand. These changes warrant analysis of inventory cost to determine if any adjustments are necessary. When market values are less than historical costs, required adjustments value inventory at market cost. The materiality of any difference will determine the necessity for an inventory adjustment.
The accounting for the purchase and use of a specific class of medical records is described below. Because of inherent limitations in current law, the term of the contract under which the contract was entered is considered to carry a “reasonable” interpretation of the terms and conditions of the contract, and thus generally includes the agreement to pay up to a limited amount. The terms of the contract may change from time to time during actual service and use.
In addition, there has been a significant shift in medical and diagnostic practices and practices in recent years. Health insurance policyholders generally buy private insurance, typically the HealthCare Exchange (HexAus), as compared with public health insurance plans. Additionally, private health insurance plans generally offer plans that reflect more favorable market performance; however, private health insurance plans generally have higher costs and/or may exclude out-of-pocket medical expenses, which can cause premiums to fall in subsequent years. Many states, the government, and other providers offer Medicaid, Medicare, or state-based Medicare Advantage, or other health insurance policies. Some providers of care, such as hospitals and doctors, pay higher premiums in some states than they do for Medicaid. Health care plans, especially private plan options, are designed to address health insurance needs and to provide high quality alternatives for individuals and families. As such, individuals in health insurance plans tend to pay more for health service (Medicare) and higher insurance (Hegel, 1997; Guevara-Diaz et al., 2005)). As medical and diagnostician practices are much more tightly structured, private health plans and state and localities usually have more flexibility to choose their providers, and they may set their own reimbursement rates for Medicare coverage and other health care benefits. Also, many physicians also provide pre-existing conditions (e.g., asthma and heart disease) as an additional type of care or treatment that provides additional benefits and services. Medical services such as imaging are generally more cost-effective relative to these other medical services. Similarly, state insurance companies can, as a general principle, cover care to individuals as part of their individual coverage, usually through the Affordable Care Act or other provisions relating to health care. The Medicaid health care program is an alternative under which the state or federal government provides a premium tax to individuals and may provide a reduced medical care service. Also, individual coverage is generally limited to certain conditions, such as those with chronic disease and certain conditions that increase with age. The Medicaid program is unique because people are not covered in state Medicaid if they live in the United States; and individuals cannot obtain coverage in Medicaid if they live in another state. Medicare, for example, offers a subsidized health care program that meets certain standards of health care quality compared to state health insurance; however, Medicare is also dependent on other federal subsidies. The following sections describe medical and diagnostic practices and practices under medical and diagnostic plans.
Physician-patient relations and referral patterns
Physician-patient relationships is known as the patient-patient relationship. In most cases, the relationship between one’s physician and individual patient does not actually exist, but one patient may choose to engage in a particular practice or provider. For instance
The accounting for the purchase and use of a specific class of medical records is described below. Because of inherent limitations in current law, the term of the contract under which the contract was entered is considered to carry a “reasonable” interpretation of the terms and conditions of the contract, and thus generally includes the agreement to pay up to a limited amount. The terms of the contract may change from time to time during actual service and use.
In addition, there has been a significant shift in medical and diagnostic practices and practices in recent years. Health insurance policyholders generally buy private insurance, typically the HealthCare Exchange (HexAus), as compared with public health insurance plans. Additionally, private health insurance plans generally offer plans that reflect more favorable market performance; however, private health insurance plans generally have higher costs and/or may exclude out-of-pocket medical expenses, which can cause premiums to fall in subsequent years. Many states, the government, and other providers offer Medicaid, Medicare, or state-based Medicare Advantage, or other health insurance policies. Some providers of care, such as hospitals and doctors, pay higher premiums in some states than they do for Medicaid. Health care plans, especially private plan options, are designed to address health insurance needs and to provide high quality alternatives for individuals and families. As such, individuals in health insurance plans tend to pay more for health service (Medicare) and higher insurance (Hegel, 1997; Guevara-Diaz et al., 2005)). As medical and diagnostician practices are much more tightly structured, private health plans and state and localities usually have more flexibility to choose their providers, and they may set their own reimbursement rates for Medicare coverage and other health care benefits. Also, many physicians also provide pre-existing conditions (e.g., asthma and heart disease) as an additional type of care or treatment that provides additional benefits and services. Medical services such as imaging are generally more cost-effective relative to these other medical services. Similarly, state insurance companies can, as a general principle, cover care to individuals as part of their individual coverage, usually through the Affordable Care Act or other provisions relating to health care. The Medicaid health care program is an alternative under which the state or federal government provides a premium tax to individuals and may provide a reduced medical care service. Also, individual coverage is generally limited to certain conditions, such as those with chronic disease and certain conditions that increase with age. The Medicaid program is unique because people are not covered in state Medicaid if they live in the United States; and individuals cannot obtain coverage in Medicaid if they live in another state. Medicare, for example, offers a subsidized health care program that meets certain standards of health care quality compared to state health insurance; however, Medicare is also dependent on other federal subsidies. The following sections describe medical and diagnostic practices and practices under medical and diagnostic plans.
Physician-patient relations and referral patterns
Physician-patient relationships is known as the patient-patient relationship. In most cases, the relationship between one’s physician and individual patient does not actually exist, but one patient may choose to engage in a particular practice or provider. For instance
To determine if inventory impairment exists, the comparison of inventory costs to market cost uses a three-part cost analysis: ceiling limit, floor limit, and replacement cost. The ceiling limit is net realizable value (NRV) calculated using sales less costs to complete Introduction to Lower, n.d.). The floor limit uses the sum of NRV less normal profit. The market cost used to evaluate any impairment will be the value between the ceiling and floor limits (Introduction to Lower, n.d.). The market cost cannot be below the floor limit or higher than the ceiling limit. Organizing the ceiling, floor, and replacement cost amounts in descending order, the middle number will be the market cost to compare against historical cost (Introduction to Lower, n.d.). The calculated difference adjusts total inventory using an allowance account. The allowance account clarifies the financial information by showing the current decline in inventory cost. This reduced value reflects the true worth of the inventory. In order for us to evaluate and value your inventory correctly, we will send you a list of additional items needed to complete the inventory value process.
Capitalized InterestThe process to determine total cost in building construction projects means identifying costs associated with completion of the project. Total costs include payments for purchase invoices, receipts for supplies, employee labor expenses, and overhead in the form of loan interest (Schroeder, et al, 2011). Typically, interest expense is part of general operating expenses. In a situation in which a building or asset is under construction, interest paid on loans used to finance the construction process is allocated as part of the total building cost. Interest included as part of the project cost includes both long-term and short-term loan interest paid. Long-term interest refers to mortgage finance loans. Short-term interest refers to interest paid for the use of a credit line or credit extended from vendors. The accumulation of costs until completion forms the historical cost. In the form of depreciation expense, the total building costs reduce net income (Schroeder, et al, 2011). At the time the building is ready for occupancy, any finance interest related to the building will revert to a normal operating expense interest. In support of historical cost of the building project, we will need an allocation of total finance interest paid in support of the building project.
To classify interest costs associated with the building project, please provide the portion of interest expense directly associated with the building project. Please provide interest amounts paid on credit balances not already recorded as a building expense.
Gain or Loss on Asset DisposalThe process of depreciating