{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/440/954/#55-implementation-guidance-and-illustrations","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"440","topic_title":"Commitments","subtopic":"440-954","subtopic_title":"Health Care Entities","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"440-954-55-1","para":"55-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_272DD585-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates the guidance in Sections <a altsource=\"GUID-ED218EF5-59DF-4AFA-9EE8-1A9C9ED95AD5.ditamap\" class=\"ditamap\">954-440-25</a> and <a altsource=\"GUID-D848770E-A593-4522-88B4-6B748E1A7727.ditamap\" class=\"ditamap\">954-440-35</a>. This Example has the following assumptions: </span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_272DD77E-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">All residents pay a $ 50,000 fee, which is refundable less 2 percent per month for the first 36 months. After that period, none of the fee is refundable. The continuing care retirement community opened on 1/1/X4. </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_272DD8E1-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An additional periodic fee of $1,000 is payable monthly with a 5 percent increase annually. </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_272DDA44-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The asset recognized for the incremental cost of obtaining the contract on 12/31/X6 is assumed to be $17,000. </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">d</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_272DDB7A-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The deferred revenue (<a href=\"/glossary/c/#contract-liability\" class=\"term\" title=\"An entity's obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.\"><span>contract liability</span></a>) on 12/31/X6 is assumed to be $27,027. </span></span> </div> </li> </ol> </div> </div>","snippet":"This Example illustrates the guidance in Sections 954-440-25 and 954-440-35. This Example has the following assumptions:\n(a) All residents pay a $ 50,000 fee, which is refundable less 2 percent per month for the first 36…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:df940942e703dfd2b063cde29b9593531fb6ca80e31062856afbe14f6c39213d","downloaded_from":"2026-09-10T00:26:42.942Z","last_downloaded_at":"2026-09-10T00:26:42.942Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477727","source_sha256":"3222a370a899f82618626b7f9c50d548eeed0f43e023a9059a29210a1aa340fb"}},{"citation":"440-954-55-2","para":"55-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following tables illustrate the present value of net cash flow on 12/31/X6.<ul class=\"ul simple\" id=\"d3e6496-115630__GUID-1635BDEC-EFAC-446B-93CC-B58E4AF9478D\"><li class=\"li\" id=\"d3e6496-115630__SL6334506-115630\"><div class=\"p\"><div class=\"fig figure fignone\" id=\"d3e6496-115630__tbl-d3e6530\"><img src=\"/asc-img/GUID-0742E35A-7E88-410D-8880-066FF26A944B-low.gif\" altsource=\"GUID-0742E35A-7E88-410D-8880-066FF26A944B-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_272DE13E-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\"> \"Estimated Remaining Life (in Months) on 12/31/X6\" Estimated Cash Inflows Resident 19X7 19X8 19X9 20X0 A 36 \" $12,000 \" \" $12,600 \" \" $13,230 \" - B 22 \" 12,000 \" \" 10,500 \" - - C 27 \" 12,000 \" \" 12,600 \" \" 3,308 \" - D 38 \" 12,000 \" \" 12,600 \" \" 13,230 \" \" $2,315 \" Estimated cash inflows \" $48,000 \" \" $48,300 \" \" $29,768 \" \" $2,315 \" </div></div></div></li><li class=\"li\" id=\"d3e6496-115630__SL6334507-115630\"><div class=\"p\"><div class=\"fig figure fignone\" id=\"d3e6496-115630__tbl-d3e6542\"><img src=\"/asc-img/GUID-40489FB1-7CD4-409D-A45B-A9A04421F508-low.gif\" altsource=\"GUID-40489FB1-7CD4-409D-A45B-A9A04421F508-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_272DE529-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\"> \"Estimated Remaining Life (in Months) on 12/31/X6\" Estimated Cash Outflows Resident 19X7 19X8 19X9 20X0 A 36 \" $10,000 \" \" $12,000 \" \" $15,000 \" - B 22 \" 15,000 \" \" 11,000 \" - - C 27 \" 14,000 \" \" 17,000 \" \" 5,000 \" - D 38 \" 8,000 \" \" 12,000 \" \" 14,000 \" \" $4,000 \" Estimated cash outflows \" $47,000 \" \" $52,000 \" \" $34,000 \" \" $4,000 \" Recapitulation 19X7 19X8 19X9 20X0 Cash inflows \" $48,000 \" \" $48,300 \" \" $29,768 \" \" $2,315 \" Cash outflows \" (47,000)\" \" (52,000)\" \" (34,000)\" \" (4,000)\" \" $1,000 \" \" $(3,700)\" \" $(4,232)\" \" $(1,685)\" Present value of net cash flows discounted at 10 percent \" $(7,137)\" </div></div></div></li></ul></div> </div>","snippet":"The following tables illustrate the present value of net cash flow on 12/31/X6.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:203fd9217ee45386d358e43cf417c6cb5b842673db02d12d2bccbf09a4955c74","downloaded_from":"2026-09-10T00:26:42.942Z","last_downloaded_at":"2026-09-10T00:26:42.942Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477727","source_sha256":"3222a370a899f82618626b7f9c50d548eeed0f43e023a9059a29210a1aa340fb"}},{"citation":"440-954-55-3","para":"55-3","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following tables illustrate the depreciation of facilities to be charged to current residents.<ul class=\"ul simple\" id=\"d3e6496-115630__GUID-FC4BF4D3-5D90-4C92-B36A-159238B2C0F1\"><li class=\"li\" id=\"d3e6496-115630__SL6334508-115630\"><div class=\"p\"><div class=\"fig figure fignone\" id=\"d3e6496-115630__tbl-d3e6552\"><img src=\"/asc-img/GUID-B8BB8644-E80F-4411-9C3E-CC685A0AB4B1-low.gif\" altsource=\"GUID-B8BB8644-E80F-4411-9C3E-CC685A0AB4B1-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_272DE8F6-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\">Original cost of facility\t\" $17,000,000 \" Cost of facility allocable to revenue-producing service areas\t\" $(2,000,000)\" Cost of facility to be allocated to residents (including common areas)\t\" $15,000,000 \" Useful life\t40 years Annual depreciation using straight-line method\t\" $375,000 \" Number of residents expected to occupy the facility\t200 Annual depreciation per resident\t\" $1,875 \" Monthly depreciation per resident $156 </div></div></div></li><li class=\"li\" id=\"d3e6496-115630__SL6334509-115630\"><div class=\"p\"><div class=\"fig figure fignone\" id=\"d3e6496-115630__tbl-d3e6558\"><img src=\"/asc-img/GUID-F14F3925-61FA-4719-A91F-1640E99F3D55-low.gif\" altsource=\"GUID-F14F3925-61FA-4719-A91F-1640E99F3D55-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_272DEC46-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\">Resident \"Estimated Remaining Life (in Months) on 12/31/X6\" 19X7 19X8 19X9 20X0 A 36 \" $1,875 \" \" $1,875 \" \" $1,875 \" - B 22 \" 1,875 \" \" 1,560 \" - - C 27 \" 1,875 \" \" 1,875 \" 468 - D 38 \" 1,875 \" \" 1,875 \" \" 1,875 \" $312 Yearly estimated depreciation of facilities to be charged to current residents \" $7,500 \" \" $7,185 \" \" $4,218 \" $312 Total estimated depreciation of the use of facilities to be charged to the current residents \" $19,215 \" </div></div></div></li></ul></div> </div>","snippet":"The following tables illustrate the depreciation of facilities to be charged to current residents.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:33ec1aebd69290d6d8fad54d25df9af77c45587bd635ab19bc87ba1fa60880af","downloaded_from":"2026-09-10T00:26:42.942Z","last_downloaded_at":"2026-09-10T00:26:42.942Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477727","source_sha256":"3222a370a899f82618626b7f9c50d548eeed0f43e023a9059a29210a1aa340fb"}},{"citation":"440-954-55-4","para":"55-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following table illustrates the liability for providing future services and the use of facilities to current residents.<ul class=\"ul simple\" id=\"d3e6496-115630__GUID-ABE33646-4A4F-483A-A562-53D131108016\"><li class=\"li\" id=\"d3e6496-115630__SL51752117-115630\"><div class=\"p\"><div class=\"fig figure fignone\"><img src=\"/asc-img/GUID-11365D79-EF72-4119-A43B-6EA0A5C9CEA4-low.gif\" altsource=\"GUID-11365D79-EF72-4119-A43B-6EA0A5C9CEA4-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_272DF07F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\">Present value of future net cash outflows \" $7,137 \" Minus: Deferred revenue (contract liability) on 12/31/X6 \" $(27,027)\" Plus: Depreciation to be charged to current residents \" $19,215 \" Asset recognized for the incremental cost of obtaining the contract—see paragraph 954-440-55-1(c) \" $17,000 \"\t(a) Liability for providing future services and the use of facilities to current residents on 12/31/X6 \" $16,325 \" (a)\t\"These numbers are for illustrative purposes only and no inference has been made as to the recoverability of the $17,000.\" </div></div></div></li></ul></div> </div>","snippet":"The following table illustrates the liability for providing future services and the use of facilities to current residents.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe9331004334769ffda1c8704ebaf31780b2419cd2de28d19bddfa6269773c0a","downloaded_from":"2026-09-10T00:26:42.942Z","last_downloaded_at":"2026-09-10T00:26:42.942Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477727","source_sha256":"3222a370a899f82618626b7f9c50d548eeed0f43e023a9059a29210a1aa340fb"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:463cac88f234e6677ddf54dd8b04559d96abf28b5b9b2de1d23841e0eaae0b4a","downloaded_from":"2026-09-10T00:26:42.942Z","last_downloaded_at":"2026-09-10T00:26:42.942Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477727","source_sha256":"3222a370a899f82618626b7f9c50d548eeed0f43e023a9059a29210a1aa340fb"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0fe3587c0c304d6cd1fd940b29ef134827c87be4dba1147dfce629899ffb07e9","downloaded_from":"2026-09-10T00:26:42.942Z","last_downloaded_at":"2026-09-10T00:26:42.942Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477727","source_sha256":"3222a370a899f82618626b7f9c50d548eeed0f43e023a9059a29210a1aa340fb"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0fe3587c0c304d6cd1fd940b29ef134827c87be4dba1147dfce629899ffb07e9","downloaded_from":"2026-09-10T00:26:42.942Z","last_downloaded_at":"2026-09-10T00:26:42.942Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477727","source_sha256":"3222a370a899f82618626b7f9c50d548eeed0f43e023a9059a29210a1aa340fb"}}