Impact of Depreciation Calculation Procedures on Cash Flow at Brandywine Clinic

How does the change in depreciation calculation procedures affect cash flow at Brandywine Clinic? The change in depreciation calculation procedures, resulting in the doubling of depreciation expense, would not affect Brandywine Clinic's cash flow. To determine the impact on cash flow, we need to calculate the change in cash flow.

Calculating Original Cash Flow

Original Depreciation Expense: $1.7 million
Original Expenses (excluding Depreciation): 76% of $10.4 million = $7.904 million
Original Cash Flow: $10.4 million - $7.904 million = $2.496 million

Calculating New Cash Flow after Depreciation Change

New Depreciation Expense: $1.7 million * 2 = $3.4 million
New Expenses (excluding Depreciation): 76% of $10.4 million = $7.904 million
New Cash Flow: $10.4 million - $7.904 million = $2.496 million

As we can see from the calculations, the change in depreciation calculation procedures did not impact Brandywine Clinic's cash flow. The cash flow remains the same at $2.496 million. Since there is no change in cash flow, the amount of change is neither negative nor positive.

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