ASC

ASC 210-954

Health Care Entities

210 Balance Sheet

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In brief

IntermediatePresentationNot-for-profitIndustry-specificFinancial statement presentation

This subtopic governs how health care entities, including not-for-profit business-oriented health care entities, present their balance sheets. The general rule is a classified (current/noncurrent) balance sheet under Section 210-10-45, except that a continuing care retirement community may instead sequence assets by nearness of conversion to cash and liabilities by nearness of maturity. It also specifies that contractually limited (non-donor) assets stay in net assets without donor restrictions, that interfund balances are eliminated, and that restricted or segregated cash is excluded from current assets.

Key points (7)
  • Health care entities shall classify assets and liabilities as current and noncurrent per Section 210-10-45, but a continuing care retirement community may instead sequence assets by nearness of conversion to cash and liabilities by nearness of maturity (210-954-45-1).
  • Assets whose use is contractually limited by an outside party other than a donor or grantor—such as trusteed bond proceeds, self-insurance funding arrangements, and statutory reserves—are included in net assets without donor restrictions (210-954-45-2).
  • Because general-purpose financial statements do not classify assets and liabilities into fund groups, interfund receivables and payables are eliminated (210-954-45-3).
  • Internally designated funds shall be reported separately from externally restricted funds, either on the face of the balance sheet or in the notes (210-954-45-4).
  • Cash and claims to cash restricted as to withdrawal or use for other than current operations, designated for acquiring or constructing noncurrent assets, segregated to liquidate long-term debt, or limited to long-term purposes by donor restriction shall be reported separately and excluded from current assets (210-954-45-5).
  • Separate bank accounts holding donor-restricted gifts are not reported on a separate line unless 954-210-45-5 requires it, because donor restrictions limit use of net assets rather than specific assets; a columnar presentation of the two net asset classes is permitted if entity-wide totals are shown (210-954-45-6).
  • If the form of internally designated assets reported separately is not evident from the balance sheet description, that form shall be disclosed in the notes (210-954-50-2).

For students. The classic trap is assuming that anything labeled "limited as to use" is donor-restricted: contractual limits imposed by trustees, lenders, or regulators leave the assets in net assets without donor restrictions, even though they are excluded from current assets. Also remember the CCRC exception to the classified balance sheet requirement.

classified balance sheetcontinuing care retirement communityassets limited as to usenet assets without donor restrictionsdonor-imposed restrictionsrestricted cashinterfund receivables and payablesinternally designated funds

Machine-generated study aid for ASC 210-954. Check the source paragraphs below.

210-954-00Status

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210-954-05Overview and Background

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210-954-05-1
This Subtopic provides guidance on balance sheets for health care entities.

210-954-15Scope and Scope Exceptions

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Overall Guidance

210-954-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic (Section 954-10-15).

210-954-45Other Presentation Matters

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210-954-45-1
Health care entities, including not-for-profit, business-oriented health care entities, shall classify assets and liabilities as current and noncurrent as discussed in Section 210-10-45. However, rather than presenting a classified balance sheet, a continuing care retirement community instead may sequence assets according to their nearness of conversion to cash and may sequence liabilities according to the nearness of the maturity and resulting use of cash.

Net Assets without Donor Restrictions

210-954-45-2
Net assets without donor restrictions of not-for-profit, business-oriented health care entities include assets whose use is contractually limited, such as the following:
  1. a
    Proceeds of debt issues and funds of the not-for-profit, business-oriented health care entity deposited with a trustee and limited to use in accordance with the requirements of an indenture or a similar agreement.
  2. b
    Other assets limited to use for identified purposes through an agreement between the not-for-profit, business-oriented health care entity and an outside party other than a donor or grantor. Examples include assets set aside under debt agreements, assets set aside under self-insurance (risk-retention) funding arrangements, and assets set aside to meet statutory reserve requirements (such as those required under state laws and regulations for many health maintenance organizations). (See paragraph 954-810-45-4.)

Interfund Receivables or Payables

210-954-45-3
Interfund receivables (or payables) may exist in internal records. However, since general-purpose financial statements of not-for-profit, business-oriented health care entities do not classify assets and liabilities into fund groups, interfund receivables (or payables) are eliminated.

Assets Limited as to Use

210-954-45-4
Internally designated funds shall be reported separately from externally restricted funds either on the face of the balance sheet or in the notes to the financial statements.

Cash and Cash Equivalents

210-954-45-5
Cash and claims to cash that meet any of the following conditions shall be reported separately and shall be excluded from current assets:
  1. a
    They are restricted as to withdrawal or use for other than current operations.
  2. b
    They are designated for expenditure in the acquisition or construction of noncurrent assets.
  3. c
    They are required to be segregated for the liquidation of long-term debts.
  4. d
    They are limited to use for long-term purposes by a donor-imposed restriction.
210-954-45-6
For fiduciary purposes, separate checking or savings accounts may be maintained for donations with donor restrictions. However, unless required by paragraph 954-210-45-5, such accounts are not reported on a line separate from other cash and cash equivalents because donor restrictions generally relate to limitations on the use of net assets rather than on the use of specific assets. A columnar presentation that highlights the two classes of net assets (that is, without donor restrictions and with donor restrictions) is not precluded if the totals for the reporting entity as a whole are displayed.

210-954-50Disclosure

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Assets Limited as to Use

210-954-50-2
When internally designated funds are reported separately from externally restricted funds in accordance with paragraph 954-210-45-4, if the form of the assets is not evident from the description on the balance sheet, the form of the assets shall be disclosed in the notes to the financial statements.

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