(a) Depreciation. - (i) The depreciation of a tangible asset used to deliver patient-related services is an allowable cost if the asset is:
- (B) Identifiable to patient care;
- (C) Available for physical inspection; and
- (D) Recorded in the provider's records.
- (ii) Basis. The basis used in calculating depreciation shall be the historical cost of the asset, which is the cost incurred by the present owner in acquiring the asset and preparing it for its use. Generally such cost includes costs that are capitalized under GAAP. For example, in addition to the purchase price, historical cost includes architectural fees, consulting fees, and related legal fees.
- (iii) Method. Depreciation shall be reported on the straight-line method.
- (iv) Useful life. Useful life shall be determined in accordance with the most recent edition of Estimated Useful Lives of Depreciable Assets, as incorporated by reference and published by the American Hospital Association.
- (v) If a single asset or collection of like assets acquired in quantity, including permanent betterment or improvements, has at the time of acquisition an estimated useful life of at least two (2) years and historical cost of at least the minimum amount utilized by Medicare for cost reporting, the cost shall be depreciated over the useful life of the asset.
- (vi) Patient-related items that do not qualify for the above definition shall be expenses in the year acquired.
- (vii) Donated assets.
- (A) Definition. An asset is donated to the extent the provider acquired the asset without paying fair market value in cash, property, or services.
- (B) Basis. The basis of donated assets, except for donations between providers or from a party related to the provider, is the asset's fair market value, minus the value the provider gave for the asset. If the fair market value of the asset is over two thousand dollars ($2,000.00), the basis shall be the lesser of the appraised value and the fair market value. If the donor is related to the provider, the basis shall be the lesser of the net book value of the donor and fair market value.
- (C) Cash donations. Cash donations shall be treated as revenue and not as an offset to expense accounts.
(b) Permanent Financing Interest. Permanent Financing Interest is financing attendant to the acquisition of patient-related tangible assets. - (i) Allowable cost. Permanent financing interest incurred on patient-related real property, improvements to real property, buildings, building components and equipment is an allowable cost subject to the limitations of this subsection.
- (ii) Investment income offset. Interest allowable pursuant to this section shall be reduced by investment income pursuant to the PRM.
- (iii) Reporting requirements. Interest expense shall be supported by a written loan agreement, showing that funds were borrowed, payment of interest and repayment of principal is required, and funds were used to purchase patient-related real property, buildings, building components and equipment. The lender, purpose, principal amount, terms and interest rate shall be identifiable in the provider's financial records.
(c) Lease and rental expense. - (i) Allowable cost. Lease or rental expenses incurred on patient-related real property, buildings, building components and equipment are an allowable cost subject to the limitations of this subsection.
(d) Related parties. If a provider rents, leases or purchases patient-related real property, buildings, building components and equipment from a party related to the provider, the cost shall be adjusted to the actual cost incurred by the related party.
(e) Amortization of leasehold improvements. - (i) Allowable cost. Lease or rental expenses incurred on patient-related real property, buildings, building components and equipment are an allowable cost subject to the limitations of this subsection.
- (ii) Amortization of leasehold improvements shall be calculated and reported in accordance with GAAP and are a capital cost.
- (iii) Amortization of organizational cost shall be reported in the operating cost component.
048-7 Wyo. Code R. § 7-10