# ASC 440-954: Commitments — Health Care Entities Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/440/954/) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:26:23.932Z to 2026-09-10T00:26:47.512Z Record version: sha256:937150cd0ac9d61088da6574e7a701ee6e294abc3b95f589b66a85d35364c4bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954: Commitments — Health Care Entities ### Machine-generated study aids ```json { "summary": "This subtopic governs the commitment of a continuing care retirement community (CCRC) to provide future services and the use of facilities to current residents under continuing-care contracts. The CCRC must recalculate that obligation annually and, if advance fees plus periodic fees are insufficient to cover the cost of future services and facilities, record a liability measured actuarially at the present value of future net cash flows, less deferred revenue (contract liability), plus depreciation of facilities to be charged to those contracts and any unamortized incremental costs of obtaining a contract. Extensive note disclosure about the contracts, liability, discount rate, escrow requirements, and refund policy is required.", "key_points": [ "A CCRC's obligation to provide future services and the use of facilities to current residents must be calculated/measured annually to determine whether a liability is reported (440-954-25-2; 440-954-35-1).", "A liability is recorded only when advance fees and periodic fees charged are insufficient to meet the costs of providing future services and facilities; it equals expected costs (resident-care, dietary, health care, facility, interest, depreciation, and amortization) over residents' remaining lives in excess of anticipated revenues, based on actuarial assumptions such as mortality and morbidity (440-954-35-2).", "Measurement formula: present value of future net cash flows, minus the balance of deferred revenue (contract liability) under Topic 606, plus depreciation of facilities to be charged to the contracts, plus any unamortized incremental costs of obtaining a contract under Subtopic 340-40 (440-954-35-3).", "The calculation is made by grouping contracts by type (for example, contracts with limits on annual fee increases versus contracts with unlimited fee increases) (440-954-35-3).", "Cash inflows include contractually committed revenue, monthly fees with contractual increases, third-party payments, committed investment income, donor pledges, and deferred nonrefundable advance fees; cash outflows are operating expenses including interest but excluding selling and general and administrative expenses; the expected inflation rate is considered in setting the discount rate, and life spans used must be the same as those used to recognize revenue (440-954-35-3).", "Contract types are all-inclusive, modified, and fee-for-service continuing-care contracts, with payment structured as advance fee only, advance fee with periodic fees, or periodic fees only (440-954-05-4; 440-954-05-6).", "Required disclosures for each year presented: description of the CCRC and nature of the continuing-care contracts, carrying amount of the present-value liability (if not shown separately on the balance sheet), the discount interest rate, statutory escrow or similar requirements, and the refund policy and general amount of refund obligation (440-954-50-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Disclosure", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This is the classic CCRC \"future service obligation\" test: it is a loss-recognition style calculation done annually, so no liability appears if fees are adequate. Students often forget that the deferred revenue balance and unamortized contract acquisition costs are backed out of (or added to) the present value computation, and that SG&A is excluded from the cash outflows.", "related_topics": [ "954-440", "954-430", "606", "340-40", "954-10" ], "key_concepts": [ "continuing care retirement community", "continuing-care contract", "obligation to provide future services and use of facilities", "advance fees and periodic fees", "refundable advance fees", "actuarial assumptions", "present value of future net cash flows", "deferred revenue (contract liability)" ] } ``` Source downloaded (UTC): 2026-09-10T00:26:23.932Z to 2026-09-10T00:26:23.932Z Record version: sha256:a1663cb0871ae79eb2d57be1d20b462fd9509b05a8598e65d358fb06f5832adf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/440/954/#00-status) SEC content: no ##### [440-954-00-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:23.932Z to 2026-09-10T00:26:23.932Z Record version: sha256:3587927d30234c84cc764b02eeb0da1ae7a67777e450b4860e620df0ed07480f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Conditional ContributionAddedAccounting Standards Update No. 2018-0806/21/2018
Contract LiabilityAddedAccounting Standards Update No. 2014-0905/28/2014
ContributionAmendedAccounting Standards Update No. 2018-0806/21/2018
ContributionAmendedAccounting Standards Update No. 2010-0701/28/2010
Donor-Imposed ConditionAddedAccounting Standards Update No. 2018-0806/21/2018
Promise to GiveAddedAccounting Standards Update No. 2018-0806/21/2018
954-440-05-3 through 05-10
AddedAccounting Standards Update No. 2014-0905/28/2014
954-440-35-3AmendedAccounting Standards Update No. 2014-0905/28/2014
954-440-55-1AmendedAccounting Standards Update No. 2014-0905/28/2014
954-440-55-4AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:cfd927955f563ea6cc462e1982491f58ccd7007e630051809dfc732ad986ac20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/440/954/#05-overview-and-background) SEC content: no ##### [440-954-05-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:b1a269bb2ffa94362c14a8ab8f3b3c3001daa05fd50c6a229f264c47ae1eaf99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on commitments for health care entities within the scope of this Topic. #### Continuing Care Retirement Community ##### [440-954-05-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:00df7036be5af2d0d688d73a7da946e707b985f919246f0b04deaa399f6cb9b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community expects to provide services and the use of facilities to individuals over their remaining lives under continuing-care contract agreements. The nature and extent of such services depend on such variables as the individual's age, health, sex, and economic status upon entering the continuing care retirement community. ##### [440-954-05-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:4fdaebb3621de54684764d351a54786970aa362ae28812d352fef2235fced0e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement community facilities may be independent or they may be affiliated with other health care facilities. They usually provide less intensive care than do hospitals. They generally supply required continuous nursing service or appropriate assistance to residents who have a wide range of medical conditions and needs. ##### [440-954-05-4](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:31140c5956ea1d53747e8fded629a41749e97f0246238d04b40c58bf047bd720 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement communities use the following three basic types of contracts: 1. a An all-inclusive continuing-care contract includes residential facilities, meals, and other amenities. It also provides long-term nursing care for little or no increase in periodic fees, except to cover normal operating costs and inflation. 2. b A modified continuing-care contract also includes residential facilities, meals, and other amenities. However, only a specified amount of long-term nursing care is provided for little or no increase in periodic fees, except to cover normal operating costs and inflation. After the specified amount of nursing care is used, residents pay either a discounted rate or the full per diem rates for required nursing care. 3. c A fee-for-service continuing-care contract includes residential facilities, meals, and other amenities as well as emergency and infirmary nursing care. Access to long-term nursing care is guaranteed, but it may be required at full per diem rates. ##### [440-954-05-5](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:dbbe6f94725a65c6a16177b149f999df1fe873ca8cdd623cf2f692982d998705 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many continuing-care contracts are similar to annuity contracts. Under those contracts, the continuing care retirement community assumes the risks associated with both of the following: 1. a Estimating the amount of the advance fee and other fees to be paid by a resident 2. b Determining whether such fees will be sufficient to cover the cost of providing a resident's required services and the use of facilities. For some contracts, residents may share the future costs without limit. The continuing care retirement community has an obligation to provide future services for the length of the contract or the life of the resident. In certain circumstances, this obligation continues regardless of whether advance fees or periodic fees are sufficient to meet the costs of providing services to a resident. ##### [440-954-05-6](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:0c3c14ae7851d25938199759d226421ad39433119b97abd8f9dfd2e89521090f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community may require several different payment methods for services and the use of facilities. The following are the three most prevalent methods: 1. a Advance fee only. Under this method, a resident pays an advance fee in return for future services and the use of facilities. Such services generally include continuing care retirement community housing-related services (for example, meals, laundry, housekeeping, and social services) and health care. These services usually are provided to the resident for the remainder of his or her life or until the contract is terminated. Additional periodic fees are not paid, regardless of how long a resident lives or if the resident requires more services than anticipated. Generally, the resident receives no ownership interest in the facility. 2. b Advance fee with periodic fees. Under this method, a resident pays an advance fee and periodic fees for services and the use of facilities. Such periodic fees may be fixed, or they may be subject to adjustment for increases in operating costs or inflation or for other economic reasons. 3. c Periodic fees only. Under this method, a resident pays a fee at periodic intervals for services and the use of the facilities provided by the continuing care retirement community. Such fees may be either fixed or adjustable. ##### [440-954-05-7](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:31187338dac38bdc614969e8dff8d52bf6d52d8d22fa44c676083ac3f683a6d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An advance fee may be met by transferring a resident's personal assets (which may include rights to future income) or by paying a lump sum of cash to the continuing care retirement community. Advance fees received for future services may be refunded at the occurrence of some future event, such as death, withdrawal from the continuing care retirement community, termination of the contract, or reoccupancy of a residential unit. The amount of the refund generally is based on contractual provisions or statutory requirements. ##### [440-954-05-8](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:f7ceb24a4b58f958b21d490925a584bcc9cb1ef3c2fe97ee90d23c279eea1a74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payment of an advance fee generally is required before a resident acquires a right to reside in an apartment or residential unit for life. A portion of advance fees may be refundable by rescission within a legally set time period or if a certain future event occurs, such as the death or withdrawal of a resident or termination of the contract. Some refunds are paid only if a residential unit is reoccupied. ##### [440-954-05-9](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:5dd23b7fcb46b1a0fc1335b799d0abd649eb4d55dabd0d35a7c70b7f0d24bef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement community refund policies vary either by region or according to statutory requirements, but generally the amount of the refund is based on provisions specified in a contract. For example, some contracts require a refund of the advance fee, less a reasonable processing fee. Amounts refunded may be based on a fixed amount or percentage, an amount that declines to a fixed amount over time, an amount that declines to zero, or an amount based on the resale amount. Refunds may be contingent on vacating the unit, resale of the unit, or passage of a fixed period of time if the unit is not resold. ##### [440-954-05-10](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:8aee1a03a36d97784c7c495ff000f63f2582af87830c0a0f22b6a7255d8090f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some contracts between a continuing care retirement community and a resident stipulate that all or a portion of the advance fee may be refundable if the contract holder's unit is reoccupied by another person. The source of money for the payment is from the proceeds of the advance fees collected by the continuing care retirement community from the next resident of the reoccupied unit. The terms governing how the proceeds from the next resident are to be paid to the previous resident vary from contract to contract. Source downloaded (UTC): 2026-09-10T00:26:29.565Z to 2026-09-10T00:26:29.565Z Record version: sha256:a2f7cf80960b34fe5f98f74343bbdebcc7ff013d3a98702d826c3406586a96e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/440/954/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [440-954-15-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:29.565Z to 2026-09-10T00:26:29.565Z Record version: sha256:2bf61ee2d7bfe208a5144825e9db4e975e623e7e08650544cec6f241df1535f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 954-10-15. Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:09cace5207aae20ce964c40472c44ccde0101cfc0e66b3739f7dea5a97597a73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/440/954/#25-recognition) SEC content: no #### Continuing Care Retirement Community ##### [440-954-25-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:380e346b1cb10db738645753e975422ab9d5424a73de50ef8a26c7ea0c2473c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The continuing care retirement community assumes a risk in estimating the cost of future services and the use of facilities. Although many continuing care retirement communities are allowed contractually to increase periodic fees, some contracts may restrict increases in periodic fees and require continuing services without additional compensation. ##### [440-954-25-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:fd37074dcce43289931d921d86ccdfb559c175eff955cd6498227cbf973513f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [954-440-35-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-1) requires that the obligation of a continuing care retirement community to provide future services and the use of facilities to current residents be calculated annually to determine whether a liability shall be recognized in the financial statements. ##### [440-954-25-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:34.890Z to 2026-09-10T00:26:34.890Z Record version: sha256:3d8f78f0ebced476539da89888e54e88104f898511fc40e329dbacb31240dfb8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [954-440-55-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-1)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:85dba59cc2206d08bfd99d16423dcf75345994021a071f169d40c6179590b937 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/440/954/#35-subsequent-measurement) SEC content: no #### Continuing Care Retirement Community ##### [440-954-35-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:24b00007c00883ba1b11aa9971079b30e433e1c8974be73dfa23081ec04c41e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The obligation of a continuing care retirement community to provide future services and the use of facilities to current residents shall be subsequently measured annually in order to determine whether a liability shall be reported in the financial statements. ##### [440-954-35-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:b626dd5b54d6e8e27459b1adeb91d9e1f04be6309d02c053a16c3dc43c771906 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the advance fees and periodic fees charged are insufficient to meet the costs of providing future services and the use of facilities, the continuing care retirement community shall record a liability based on actuarial assumptions (such as mortality and morbidity rates), on estimates of future costs and revenues, and on the specific continuing care retirement community's historical experience and statistical data. The liability is equal to the amount that is expected to be incurred to provide services and the use of facilities to individuals over their remaining lives under continuing care contracts (including resident-care, dietary, health care, facility, interest, depreciation, and amortization costs) in excess of the related anticipated revenues. ##### [440-954-35-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:da0c142acc037a963a1ed21625a6fc3f6ee1fec9d8c438db536d73b4e9af7d08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability related to continuing-care contracts shall be the present value of future net cash flows, minus the balance of deferred revenue ([contract liability](https://asc.understandingaccounting.org/glossary/c/#contract-liability "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.")) (see Topic 606), plus depreciation of facilities to be charged related to the contracts, plus any unamortized incremental costs of obtaining a contract (see Subtopic 340-40), if applicable. The calculation shall be made by grouping contracts by type, such as all contracts with a limit on annual increases in fees, contracts with unlimited fee increases, and so forth. Cash inflows shall include revenue contractually committed to support the residents and inflows resulting from monthly fees including anticipated increases in accordance with contract terms. This shall include third-party payments, contractually or statutorily committed investment income from services related to continuing care retirement community activities, [contributions](https://asc.understandingaccounting.org/glossary/c/#contribution "An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.") pledged by donors to support continuing care retirement community activities, and the volume of deferred nonrefundable advance fees. Cash outflows shall be composed of operating expenses, including interest expense and excluding selling, and general and administrative expenses. Anticipated cost increases affecting these operating expenses shall be considered in determining cash outflows. The expected inflation rate as well as other factors shall be considered in determining the discount rate. In calculating the liability, the specific continuing care retirement community's historical experience or statistical data relating to the residents' life spans shall be used. The life spans used shall be the same as those used to recognize revenue. For a new continuing care retirement community, either relevant data of similar communities in the area or relevant national industry statistics may be used if they are deemed to be representative. ##### [440-954-35-4](https://asc.understandingaccounting.org/asc/440/954/#440-954-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:38.957Z to 2026-09-10T00:26:38.957Z Record version: sha256:20c735bd0f6423ef372f8d485314ff8410899a404cb44ae75546f87777dfc094 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [954-440-55-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-1)) for an illustration of this guidance. Source downloaded (UTC): 2026-09-10T00:26:40.780Z to 2026-09-10T00:26:40.780Z Record version: sha256:27dfe97652fcab789bdad4fe827f17cb7aaa338373f7ae38b7ccc62d02f1f5b5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/440/954/#50-disclosure) SEC content: no #### Continuing Care Retirement Community ##### [440-954-50-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:40.780Z to 2026-09-10T00:26:40.780Z Record version: sha256:cc79f67171d02e8c92b2e1cea33d6c3863d921dde700c95cf9e39ad8bc21b325 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community shall disclose all of the following in its notes to the financial statements for each year presented: 1. a A description of the continuing care retirement community and the nature of the related continuing-care contracts entered into by the continuing care retirement community 2. b The carrying amount of the liability to provide future services and the use of facilities related to continuing-care contracts that is presented at present value in the financial statements (if not separately disclosed in the balance sheet) 3. c The interest rate used to discount that liability to provide future services 4. d The statutory escrow or similar requirements 5. e The refund policy of the continuing care retirement community and the general amount of refund obligation under the existing contracts. Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:0fe3587c0c304d6cd1fd940b29ef134827c87be4dba1147dfce629899ffb07e9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/440/954/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [440-954-55-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:df940942e703dfd2b063cde29b9593531fb6ca80e31062856afbe14f6c39213d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in Sections 954-440-25 and 954-440-35. This Example has the following assumptions: 1. a 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. 2. b An additional periodic fee of $1,000 is payable monthly with a 5 percent increase annually. 3. c The asset recognized for the incremental cost of obtaining the contract on 12/31/X6 is assumed to be $17,000. 4. d The deferred revenue ([contract liability](https://asc.understandingaccounting.org/glossary/c/#contract-liability "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.")) on 12/31/X6 is assumed to be $27,027. ##### [440-954-55-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:203fd9217ee45386d358e43cf417c6cb5b842673db02d12d2bccbf09a4955c74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following tables illustrate the present value of net cash flow on 12/31/X6. - ![](https://asc.understandingaccounting.org/asc-img/GUID-0742E35A-7E88-410D-8880-066FF26A944B-low.gif) "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 " - ![](https://asc.understandingaccounting.org/asc-img/GUID-40489FB1-7CD4-409D-A45B-A9A04421F508-low.gif) "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)" ##### [440-954-55-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:33ec1aebd69290d6d8fad54d25df9af77c45587bd635ab19bc87ba1fa60880af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following tables illustrate the depreciation of facilities to be charged to current residents. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B8BB8644-E80F-4411-9C3E-CC685A0AB4B1-low.gif) Original cost of facility " $17,000,000 " Cost of facility allocable to revenue-producing service areas " $(2,000,000)" Cost of facility to be allocated to residents (including common areas) " $15,000,000 " Useful life 40 years Annual depreciation using straight-line method " $375,000 " Number of residents expected to occupy the facility 200 Annual depreciation per resident " $1,875 " Monthly depreciation per resident $156 - ![](https://asc.understandingaccounting.org/asc-img/GUID-F14F3925-61FA-4719-A91F-1640E99F3D55-low.gif) 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 " ##### [440-954-55-4](https://asc.understandingaccounting.org/asc/440/954/#440-954-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:42.942Z to 2026-09-10T00:26:42.942Z Record version: sha256:fe9331004334769ffda1c8704ebaf31780b2419cd2de28d19bddfa6269773c0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates the liability for providing future services and the use of facilities to current residents. - ![](https://asc.understandingaccounting.org/asc-img/GUID-11365D79-EF72-4119-A43B-6EA0A5C9CEA4-low.gif) 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 " (a) Liability for providing future services and the use of facilities to current residents on 12/31/X6 " $16,325 " (a) "These numbers are for illustrative purposes only and no inference has been made as to the recoverability of the $17,000." Source downloaded (UTC): 2026-09-10T00:26:44.619Z to 2026-09-10T00:26:44.619Z Record version: sha256:038bb03abf161483f362ba211d32f3a4789c73efab632aea9aae8bb602c85ac5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/440/954/#60-relationships) SEC content: no ##### [440-954-60-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:44.619Z to 2026-09-10T00:26:44.619Z Record version: sha256:53591bc5483ea04e46d52442eb708daf5f5e59911c300fcb72844be25eb0e082 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Section not used](https://asc.understandingaccounting.org/updates/page-1833002/).