My organization has significant electronic health record (EHR) software that has been fully depreciated and is included in its entirety within accumulated depreciation on our books. During the past several years, the organization has invested in numerous additional upgrades on our EHR software, which are currently being appropriately depreciated.
Is it acceptable practice to retire the original EHR software or any percentage given that numerous upgrades have occurred? Or is the acceptable practice to keep both the original software and all upgrades on the balance sheet until the legacy software is no longer in use?
Answer: If the upgrade (purchase) extends the useful life of the EHR, (i.e., adds more functionality) then yes, your organization should keep it on the books. It can keep both the existing and the new additional upgrades. If the upgrade is a replacement, your organization should write off the original EHR.
It is acceptable practice is to keep both the original software and all upgrades on the balance sheet until the legacy software is no longer in use.
This question was answered by: Rosemary Rotty, MHA, FHFMA, director, service line, finance, UMass Memorial Health Care, and is a member of HFMA’s Rhode Island Chapter.
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