1. (1) Total depreciation expense for reporting period:

   1. (i) Depreciation and Amortization—Fixed Assets (account 8810), plus
   2. (ii) Depreciation and Amortization—Movable Equipment (account 8820).

2. (2) Source and amount of cash disbursed for capital assets:

   1. (i) Unrestricted Fund (exclude borrowed from outside sources).
   2. (ii) Specific purpose funds.
   3. (iii) Plant replacement and expansion funds.
   4. (iv) Endowment funds.
3. (3) Payments made during year to reduce capital debt (principal only).

4. (4) Change in composition of depreciation fund balance.

   Subtract balance at the end of the prior reporting period from balance at the end of the current reporting period for total assets, total liabilities and fund balances.

5. (5) Maximum allowable depreciation expense:

   1. (i) Take the total amount of cash disbursed for capital assets.
   2. (ii) Add payments made to reduce capital debt.
   3. (iii) Add or subtract increase or decrease in depreciation fund balance.

6. (6) Depreciation not funded:

   1. (i) If maximum allowable depreciation expense exceeds or is equal to total depreciation expense reported, depreciation has been fully funded.
   2. (ii) If maximum allowable depreciation expense is less than total depreciation expense reported, the depreciation funding requirement has not been met.
7. (b) Total depreciation expense for the reporting period (paragraph [a][1] of this section) should reflect Medicaid adjustments (section 446.37 of this Part).

(a) Calculation to determine extent of depreciation funding.