Exam 14: Health-Care Providers

In 2016 St. Martin's Hospital received a $50,000 cash gift to be used to buy supplies and other items for the pediatric department of the hospital. In 2017, St. Martin's purchased puppets and other items to be used in explaining medical procedures to young children. The acquisition of the items causes a NET decrease in which class(es) of net assets?

A hospital estimates that, based on past experience, it will incur $5 million in malpractice claims as a result of services rendered in the current period. The hospital carries a malpractice insurance policy with a yearly $2 million deductible clause. The amount that should appear on its year-end financial statement as Claims Expense (Loss) should be

Sponsors of not-for-profit health care organizations generally include:

Problem 2 To record contribution revenue (in a nonrestricted fund) (The portion of the contribution that was spent in the same year as it was received may be recorded as nonrestricted revenue.) To record the remaining balance of the contribution (in a donor restricted fund). d. Endowment earnings To record investment income (in a nonrestricted fund). The entire amount is nonrestricted in as much as the spending restriction was imposed by the board, rather than by outside donors. e. Increase in market value of investments To record the increase in market value of investments (in a nonrestricted fund). As indicated in the problem, income from endowments is nonrestricted. f. Depreciation To record depreciation expense (in a nonrestricted fund) g. Others operating expenses To record the other operating expenses (in a nonrestricted fund) . h. Building fund pledge

A "term endowment" is a gift with donor specifications whereby

Which of the following would normally be considered ongoing or central transactions for a not-for-profit hospital?

In the process of general purpose external financial reporting, a health care organization is required to present

A not-for-profit hospital signs a contract with an insurance company in which the company agrees to pay the hospital $9 million in capitation fees for the year July 1, 2017, through June 30, 2018. Between July 1, 2017 and December 31, 2017, the hospital provides services that, at its standard rates, would bill at $5.1 million. Between January 1, 2017, and June 30, 2018, it provides services that it would bill at $4.2 million. For the year ending December 31, 2017, the hospital should recognize capitation revenue of

The amount of nonrestricted revenue that should be recognized by Pelican in the year of the gift is

Intermountain Hospital, a not-for-profit health care provider, issued $70 million in term bonds to finance construction of a new wing at its main hospital. Terms of the bond issue require that $5 million of the proceeds of the bond issue be invested in U.S. government securities. The $5 million must be held until maturity of the bonds. The $5 million will increase which class of net assets?

In a not-for-profit health care organization, the cost of malpractice must be accrued if it is either probable that impairment has occurred or if the amount of loss can be reasonably estimated.

In the long run, the health of a hospital depends mainly on the demand for its services and the ability to meet that demand at a reasonable cost.

A consortium of physicians agrees to provide services to the employees of a large county government. The agreement calls for monthly payments from the county to the consortium in the amount of $200,000 per month. County employees are not billed for services rendered by the consortium. All county employees are required to use the consortium under their health care program (any services rendered to county employees by other physicians are not covered under the health plan). During the month the consortium performed services for county employees for which it would have billed $170,000. The consortium referred patients to other health care providers for services they could not perform. The consortium estimates that patients will be billed $10,000 for those services. The amount of revenue that should be recognized for the month by the consortium is

The Medical Arts Clinic, a well-established health care organization, received a $1,500,000 pledge in fiscal year 2018 that was restricted to cover operating expenses. The gift was received over two years; $600,000 in the first year and $900,000 in the second year. The following table reflects the funds received as well as the amounts spent on operating the clinic. What should the clinic report as Net Assets Released from Restrictions on the statement of activities for the fiscal year ended June 30, 2019?

Not-for-profit hospitals are accounted for similarly to businesses but must adhere to the FASB's standards for not-for-profit entities.

Medicaid is a federally sponsored and managed health care program for retirees.

The amount of restricted revenue that should be recognized by Pelican in the year of the gift is

The Gulf Coast bank is holding a $750,000 donation in an independent permanent trust with the investment income dedicated for use by Coastal Hospital for operating purposes. The $750,000 principal should be:

A hospital carried a 2-year malpractice insurance policy that allows for retroactive premium adjustments based on experience (claims actually incurred). The basic premium is $300,000, payable in advance. At the end of the first year the hospital estimates that it will have to pay an additional $80,000 in premiums as a result of claims filed in the current year and it estimates that it will incur additional premiums in the second year of $100,000 as a result of claims filed in the second year. The amount of insurance expense that should appear on the financial statements at the end of the first year should be

Not-for-profit health care entities must provide information on the two categories of net asset donor restrictiveness.