Since St. Jude Children's Research Hospital is a not-for-profit agency, they are required by FAS 116, Para. 14, to distinguish between contributions with restrictions, with temporary restrictions, and those with donor-imposed restrictions. Additionally, any contributions without donor-imposed restrictions are to report as support that increases unrestricted net assets. Therefore, this adjustment would likely pertain to any number of facts governed with these guidelines ( DRURY, 2013) .
Contributions are recorded under separate accounts, they are: gifts, grants and similar amounts received via direct public support, indirect public support Government contributions and grants. Under FAS 116 when contributions are recorded are related to the type of contribution. According to FAS 116 glossary, (1993) a contribution is the transfer of an asset or cancellation of a liability without consideration. That is without the requirement of something in return and is termed a nonreciprocal contribution. Conversely, a reciprocal transaction implies there is an exchange usually with goods or services of a comparable value ( Folland, Goodman, & Stan, 2017) .
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St. Jude Children's Research Hospital does list a distinction between pledges receivable and accounts receivable via accounts listed on their financial statements. Accounts receivable generally pertains to a service or good that has been provided and is awaiting compensation. Whereas a pledge is a promise to give without receiving anything of value in return. FAS 116 established new requirements for recognizing donated services to be either 1) a service creates or enhances non-financial assets, like volunteers who preform basic maintenance or cleanup at a building or 2) the services being donated are of special skills that would have been purchased if not for them being donated, such as lawyers or craftsmen.
Revenue mix
Business is declining
Medicare at 35.6% and has decreased by about % each year
Program service revenues at approximately $46,034,710
1999’s 10k- net revenue of $2,042,380
Revenue blend
2010 net sales= $5,164,771
1999 net sales= $2,042,380
Managed Care and Medicare pays most bills because they have a higher percentage of net revenue.
If the government were to be owned and operated by the hospital and the revenue and contributions would not need to be recorded. The government is not required to report revenue nor contributions unless they receive it within 60 days prior to the end of the fiscal year. FAS 116 adjustments unfortunately would not relate to this situation with the exception that the collection is efficiently proven. If the government were to be owned and operated by the hospital as previously mentioned, it would have to be proven 60 days before the end of the fiscal year. In this scenario, the contributions would have to be recorded in the accounts that would be used. If the government has control over St. Jude Children´s Research Hospital, it would seek revenue from capital contributors such as federal taxes, state taxes, and property taxes compared to using charitable contributors. Another considerable difference is that the government ran hospitals are organized and administrated differently compared to non-profit organizations. The organizations use a board or electives within the government that own the hospitals and provide supervision and/or provide the officials.
The government should not require reporting revenue or contributions with the exception that they achieve it 60 days prior to the end of the fiscal year.
Contributions would have to be reported in the accounts that it is to use in or for.
In conclusion, the case involving St. Jude´s Hospital, the case accepts multiple types of charity care including Medicaid, and extends to Medicare, etc. St. Jude is a non-profit hospital, although they ensure that all the finances are reported accurately. The 10K filings that were linked are associated with that of the hospital and contain enough information about the company and there condition of how the company is doing. Finally, the result is that non-profit organizations can lose money just as much, of not more than an average hospital can.
DRURY, C. (2013). MANAGEMENT AND COST ACCOUNTING. New York: Springer.
Folland, S., Goodman, A., & Stan, M. (2017). The Economics of Health and Health Care. New York: Taylor & Francis.
