HFMA
Certified Hospital Cost Report Specialist
Complete Exam Review
(With Solutions)
2026
1
, 1. Case: A hospital purchases a new MRI scanner and places it in
service mid‑year. For Medicare cost reporting, which depreciation
method and allocation principle most accurately determines the
allowable depreciation expense for that fiscal year?
- A. Use straight‑line depreciation and prorate expense based on
months in service; allocate to cost centers using actual usage
statistics
- B. Expense full cost in year of purchase regardless of service date
- C. Use accelerated depreciation and allocate evenly across all
departments
- D. Capitalize but exclude depreciation from Medicare cost report
Answer: A. Use straight‑line depreciation and prorate expense
based on months in service; allocate to cost centers using actual
usage statistics
Rationale: Medicare allows reasonable depreciation; expense is
prorated for months in service and allocated to cost centers based on
utilization or other reasonable statistics.
2. Case: During a desk review, a Medicare auditor questions a
hospital’s allocation of administrative salaries to ancillary cost
centers. Which documentation best supports the hospital’s
allocation methodology?
- A. A signed memo from the CFO only
- B. Time studies, payroll distribution reports, and a written
allocation policy showing consistent application
- C. A single month of random timesheets
- D. Verbal assurance from department managers
Answer: B. Time studies, payroll distribution reports, and a written
allocation policy showing consistent application
Rationale: Auditors expect objective support (time studies/payroll)
2
Certified Hospital Cost Report Specialist
Complete Exam Review
(With Solutions)
2026
1
, 1. Case: A hospital purchases a new MRI scanner and places it in
service mid‑year. For Medicare cost reporting, which depreciation
method and allocation principle most accurately determines the
allowable depreciation expense for that fiscal year?
- A. Use straight‑line depreciation and prorate expense based on
months in service; allocate to cost centers using actual usage
statistics
- B. Expense full cost in year of purchase regardless of service date
- C. Use accelerated depreciation and allocate evenly across all
departments
- D. Capitalize but exclude depreciation from Medicare cost report
Answer: A. Use straight‑line depreciation and prorate expense
based on months in service; allocate to cost centers using actual
usage statistics
Rationale: Medicare allows reasonable depreciation; expense is
prorated for months in service and allocated to cost centers based on
utilization or other reasonable statistics.
2. Case: During a desk review, a Medicare auditor questions a
hospital’s allocation of administrative salaries to ancillary cost
centers. Which documentation best supports the hospital’s
allocation methodology?
- A. A signed memo from the CFO only
- B. Time studies, payroll distribution reports, and a written
allocation policy showing consistent application
- C. A single month of random timesheets
- D. Verbal assurance from department managers
Answer: B. Time studies, payroll distribution reports, and a written
allocation policy showing consistent application
Rationale: Auditors expect objective support (time studies/payroll)
2
