Exam 14: Health-Care Providers

Hospital revenue usually includes which of the following? A) B) C) D)

A specialized health care facility normally purchases its medicines. However, this month a wealthy philanthropist donates the medicines. The donated medicines should be recorded at fair market value and should be credited to:

Problem 1

During the current year, a voluntary health and welfare organization receives $800,000 in nonrestricted pledges. Of this amount, $300,000 has been designated by donors for use next year to support operations in the pharmacy. If 20 percent of the nonrestricted pledges are expected to be uncollectible, what amount of nonrestricted support should the organizations recognize in its current-year financial statements?

Nonrestricted revenues of a not-for-profit health care organization generally are subdivided into "patient care revenue" and "other revenue." Which of the following revenues would NOT be considered patient care revenue?

The statement of activities must indicate net assets released from restriction and any transfers between funds.

Capitation fees paid by HMOs to hospitals, physicians, and other medical groups generally are based on the number of persons covered and expected costs to be incurred rather than on actual services provided.

A not-for-profit residential assisted-living center engaged in the following transactions during the year. Prepare appropriate journal entries. a. The center billed residents for $4,100,000. Of this amount it estimates that $2,000,000 will be paid by third-party providers at a rate of only 80 percent. Of the remaining balance, it estimates that 2 percent will be uncollectible. b. The center collected $3,400,000. c. The center received a cash contribution of $70,000 to be used exclusively for residents' educational and cultural programs. Of this amount, the center spent $55,000 on qualified activities during the year. d. The center earned interest and dividends of $25,000 (cash) on its endowment of $500,000. Income from the endowment is nonrestricted. However, it is the policy of the center's board of trustees that only income greater than 2 percent of the principal balance will be available for expenditures. The balance will be retained in the endowment to compensate for inflation. Thus, only $15,000 of the income was made available for expenditure. e. The market value of the endowment's investments increased by $10,000. f. The center recognized $170,000 of depreciation on the building and $55,000 on equipment. g. The center incurred other operating expenses of $3,500,000, of which $3,300,000 was paid in cash. h. At year-end the center received a pledge of $4,200,000 toward the center's new building campaign. It will be paid at the rate of $1,400,000 at the end of each of the following three years. The center uses a discount rate of 3 percent to value noncurrent pledges. Based on that rate, the present value of the annuity is $3,960,040.

For a not-for-profit hospital, which of the following financial statements is NOT required?