NFP FINAL EXAM REVIEW CHAPTER
#14 QUESTIONS AND ANSWERS
The BSK Health-Care foundation donated $900,000 as an endowment to be held in
perpetuity to a senior citizens health and welfare organization during the year. The
foundation stipulated that the income and investment appreciation be used to
maintain its preventive care center for the elderly. The following year, the
endowment principal had an investment appreciation of $60,000 and investment
income of $80,000. The organization spent $70,000 to maintain it preventive care
center during the year. What is the amount of change in net assets with donor
restrictions that the organization should report for the year? - ANSWER-$70,000
A NFP hospital signs a contract with an insurance company in which the company
agrees to pay it $6 million in capitation fees for the year July 1, 2020 through June
30, 2021. Between July 1, 2020 and December 31, 2021, the hospital provides
services that, at its standard rates, would bill at $3.4 million. Between Jan 1, 2020
and June 30, 2021, it provides services that it would bill at $2.8 million. For the year
ending December 31, 2020, the hospital should recognize capitation revenue of... -
ANSWER-$3 million
During a particular year, a NFP hospital provides services that at standard rates
would be billed at $200 million. this amount includes $10 million of charity care. Of
the remaining $190 million, it estimates that $120 million will be billed to third-party
providers, which, per contractual agreements, will pay only 75% of the standards
rate. Of the $70 million to be billed to individuals, the hospital estimates that $40
million will have to be written off as bad debts. The hospital should recognize net
patient care revenue as ... - ANSWER-$120
A NFP hospital received a donor-restricted contribution of $10 million, which is used
to purchase new equipment. It estimates that the useful life of the equipment will be
10yrs with no salvage value. In the year of the contribution, the hospital should
recognize... - ANSWER-Depreciation of $1 million classified as an expense without
donor restrictions
A gov't hospital determines that the death of a patient was the result of negligence
on the part of its medical staff. As of the date its financial statements are to be
released; no claims have been asserted against the hospital. Nevertheless, based
on past experience, the hospital is reasonably certain that a lawsuit will be
forthcoming and estimates it will likely result in a required cash payment of between
$3 and $5 million after accounting for insurance recoveries. In its financial
statements the hospital should... - ANSWER-Disclose the nature of the incident and
indicate the likely range of the loss
Ms. Wiley's estate donated land with a fair market value of $600,000 and subject to
the mortgage of $320,000 to Saint Joseph Hospital without any restriction. Which of
the following entries should the St. Joseph Hospital make to record this donation? -
ANSWER-Land $600,000
Mortgage payable $320,000
#14 QUESTIONS AND ANSWERS
The BSK Health-Care foundation donated $900,000 as an endowment to be held in
perpetuity to a senior citizens health and welfare organization during the year. The
foundation stipulated that the income and investment appreciation be used to
maintain its preventive care center for the elderly. The following year, the
endowment principal had an investment appreciation of $60,000 and investment
income of $80,000. The organization spent $70,000 to maintain it preventive care
center during the year. What is the amount of change in net assets with donor
restrictions that the organization should report for the year? - ANSWER-$70,000
A NFP hospital signs a contract with an insurance company in which the company
agrees to pay it $6 million in capitation fees for the year July 1, 2020 through June
30, 2021. Between July 1, 2020 and December 31, 2021, the hospital provides
services that, at its standard rates, would bill at $3.4 million. Between Jan 1, 2020
and June 30, 2021, it provides services that it would bill at $2.8 million. For the year
ending December 31, 2020, the hospital should recognize capitation revenue of... -
ANSWER-$3 million
During a particular year, a NFP hospital provides services that at standard rates
would be billed at $200 million. this amount includes $10 million of charity care. Of
the remaining $190 million, it estimates that $120 million will be billed to third-party
providers, which, per contractual agreements, will pay only 75% of the standards
rate. Of the $70 million to be billed to individuals, the hospital estimates that $40
million will have to be written off as bad debts. The hospital should recognize net
patient care revenue as ... - ANSWER-$120
A NFP hospital received a donor-restricted contribution of $10 million, which is used
to purchase new equipment. It estimates that the useful life of the equipment will be
10yrs with no salvage value. In the year of the contribution, the hospital should
recognize... - ANSWER-Depreciation of $1 million classified as an expense without
donor restrictions
A gov't hospital determines that the death of a patient was the result of negligence
on the part of its medical staff. As of the date its financial statements are to be
released; no claims have been asserted against the hospital. Nevertheless, based
on past experience, the hospital is reasonably certain that a lawsuit will be
forthcoming and estimates it will likely result in a required cash payment of between
$3 and $5 million after accounting for insurance recoveries. In its financial
statements the hospital should... - ANSWER-Disclose the nature of the incident and
indicate the likely range of the loss
Ms. Wiley's estate donated land with a fair market value of $600,000 and subject to
the mortgage of $320,000 to Saint Joseph Hospital without any restriction. Which of
the following entries should the St. Joseph Hospital make to record this donation? -
ANSWER-Land $600,000
Mortgage payable $320,000
