FASB ASC 954 - Health Care Entities


The Financial Accounting Standards Board (FASB) released Accounting Standards Codification 954 (ASC 954) to address topics related to Health Care entities. As those entities in the health care industry generally have unique transactions and business models from other industries, there are certain set standards which each company must conform to whether a not-for-profit or for-profit model. Specifically, transactions called Contributions are discussed in depth.

Typical Health Care Entities Included in ASC 954

  • Hospitals
  • Nursing Homes
  • Medical Clinics
  • Continuing Care Retirement Communities
  • Health Maintenance Organizations
  • Home Health Agencies
  • Rehabilitation Facilities
Effects of ASC 954-815
These types of organizations are typically considered to be not for profit entities.  Should these be classified as such, the performance indicator which is displayed in the financial statements is to be considered to be the equivalent of Net Income from Continuing Operations in a for profit company.  As a result, a few items that would be excluded would be:
  • Items typically included in Other Comprehensive Income
  • Extraordinary items
  • Discontinued operations
  • Cumulative effect of accounting changes
  • Transactions with owners

Of course this is not a comprehensive listing, but should be used in order to gain the conceptual idea of the key performance indicator of the entity.  For the most part, as Health Care entities are typically not for profits, they should be accounted for in accordance with the standards relevant for not for profit entities. which is FASB ASC 958.

Check out more high level explanations of the FASB ASC in our Guide to the Accounting Standards Codification!

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