# ASC 605-954: Revenue Recognition — Health Care Entities

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/605/954/)

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.

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Source downloaded (UTC): 2026-09-10T00:50:41.818Z to 2026-09-10T00:51:15.106Z

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## ASC 605-954: Revenue Recognition — Health Care Entities

### Machine-generated study aids

```json
{
  "summary": "After ASU 2014-09 superseded most of its content, ASC 605-954 retains only two pieces of health care recognition guidance: charity care and distributions from financially interrelated fundraising (recipient) entities. Charity care is never recognized as revenue, and distributions from a related fundraising foundation are generally a reduction of the health care entity's interest in that recipient entity rather than contribution revenue. Revenue from contracts with patients and other customers is now governed by Topic 606.",
  "key_points": [
    "Topic 606 now provides the revenue recognition guidance for health care entities' contracts with customers; this Subtopic covers only charity care and related fundraising entities (605-954-05-1; 605-954-25-1).",
    "Charity care does not qualify for recognition as revenue, and only the portion of a patient's account meeting the entity's charity care criteria may be treated as charity; distinguishing charity care from bad-debt expense requires judgment (605-954-25-10).",
    "The charity care determination need not be made at admission or registration, but at some point the entity must determine the individual meets its established charity care criteria (605-954-25-11).",
    "Distributions from a financially interrelated recipient entity to the nongovernmental health care entity it supports are generally reported as a reduction of the health care entity's interest in the recipient entity (605-954-25-12).",
    "If the distribution comes from net assets not includable in that interest (because the recipient entity controls to whom assets are distributed), the health care entity reports a contribution from the related recipient entity (605-954-25-12).",
    "Financial statements must disclose management's charity care policy and the level of charity care provided, measured at the provider's direct and indirect costs, plus the method used to identify or estimate those costs (605-954-50-3).",
    "Funds received to offset or subsidize charity care, such as restricted gifts, grants, or uncompensated care fund amounts, must be separately disclosed (605-954-50-3)."
  ],
  "categories": [
    "Revenue",
    "Recognition",
    "Disclosure",
    "Not-for-profit"
  ],
  "audience_level": "intermediate",
  "student_note": "Exam traps: charity care is never revenue (and therefore is not a bad-debt expense either), and the required disclosure is at cost, not at gross charges. Also remember that most of this Subtopic was superseded by ASU 2014-09 — patient service revenue questions now go to Topic 606.",
  "related_topics": [
    "606",
    "954-605",
    "958-20",
    "954-10",
    "958-605"
  ],
  "key_concepts": [
    "charity care",
    "bad-debt expense",
    "cost of charity care disclosure",
    "financially interrelated entities",
    "recipient entity distributions",
    "interest in recipient entity",
    "contribution revenue",
    "health care entities"
  ]
}
```

Source downloaded (UTC): 2026-09-10T00:50:41.818Z to 2026-09-10T00:50:41.818Z

Record version: sha256:2b81f721d4edac8cf0ab2244fddfc13153deee095fb54e9055859cb6d7781de7

Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f

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## ASC 605-954-00: 00 Status

[Read section](https://asc.understandingaccounting.org/asc/605/954/#00-status)

SEC content: no

##### [605-954-00-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-00-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:50:41.818Z to 2026-09-10T00:50:41.818Z

Record version: sha256:d78489cd28a2beb2066dfe8f0bbde630a4fae2839244d070302f528bc226837e

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The following table identifies the changes made to this Subtopic.

<table class="asc-table" id="SL6250484-165484"><tbody><tr><td class="entry text-align-center" colspan="1"><strong class="ph b">Paragraph</strong></td><td class="entry"><strong class="ph b">Action</strong></td><td class="entry"><strong class="ph b">Accounting Standards Update</strong></td><td class="entry"><strong class="ph b">Date</strong></td></tr><tr><td class="entry"></td></tr><tr><td class="entry"><strong class="ph b">Capitation Fee</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#conditional-contribution" class="term" title="A contribution that contains a donor-imposed condition."><span>Conditional Contribution</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2018-08/" class="xref">Accounting Standards Update No. 2018-08</a></td><td class="entry">06/21/2018</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#conduit-debt-securities" class="term" title="Certain limited-obligation revenue bonds, certificates of participation, or similar debt instruments issued by a state or local governmental entity for the express purpose of providing financing for a specific third party (the conduit bond obligor) that is not a part of the state or local government's financial reporting entity. Although conduit debt securities bear the name of the governmental entity that issues them, the governmental entity often has no obligation for such debt beyond the resources provided by a lease or loan agreement with the third party on whose behalf the securities are issued. Further, the conduit bond obligor is responsible for any future financial reporting requirements."><span>Conduit Debt Security</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/asc-pdf/GUID-EFA6D1D7-EED2-443D-BBD3-C6F2E960EBE3.pdf" class="pdf-link" target="_blank" rel="noopener">Maintenance Update 2014-20 (PDF)</a></td><td class="entry">09/29/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#contract" class="term" title="An agreement between two or more parties that creates enforceable rights and obligations."><span>Contract</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#contribution" class="term" title="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."><span>Contribution</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2018-08/" class="xref">Accounting Standards Update No. 2018-08</a></td><td class="entry">06/21/2018</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#contribution" class="term" title="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."><span>Contribution</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-07/" class="xref">Accounting Standards Update No. 2010-07</a></td><td class="entry">01/28/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/c/#customer" class="term" title="A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."><span>Customer</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><strong class="ph b">Diagnosis-Related Group</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/d/#donor-imposed-condition" class="term" title="A donor stipulation (donors include other types of contributors, including makers of certain grants) that represents a barrier that must be overcome before the recipient is entitled to the assets transferred or promised. Failure to overcome the barrier gives the contributor a right of return of the assets it has transferred or gives the promisor a right of release from its obligation to transfer its assets."><span>Donor-Imposed Condition</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2018-08/" class="xref">Accounting Standards Update No. 2018-08</a></td><td class="entry">06/21/2018</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/n/#nonpublic-entity" class="term" title="Any entity that does not meet any of the following conditions: Its debt or equity securities trade in a public market either on a stock exchange (domestic or foreign) or in an over-the-counter market, including securities quoted only locally or regionally. It is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It files with a regulatory agency in preparation for the sale of any class of debt or equity securities in a public market. It is required to file or furnish financial statements with the Securities and Exchange Commission. It is controlled by an entity covered by criteria (a) through (d)."><span>Nonpublic Entity</span></a> (Def. 1)</td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/asc-pdf/GUID-EFA6D1D7-EED2-443D-BBD3-C6F2E960EBE3.pdf" class="pdf-link" target="_blank" rel="noopener">Maintenance Update 2014-20 (PDF)</a></td><td class="entry">09/29/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/n/#nonpublic-entity" class="term" title="Any entity that does not meet any of the following conditions: Its debt or equity securities trade in a public market either on a stock exchange (domestic or foreign) or in an over-the-counter market, including securities quoted only locally or regionally. It is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It files with a regulatory agency in preparation for the sale of any class of debt or equity securities in a public market. It is required to file or furnish financial statements with the Securities and Exchange Commission. It is controlled by an entity covered by criteria (a) through (d)."><span>Nonpublic Entity</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr><tr><td class="entry"><strong class="ph b">Prepaid Health Care Plan</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#promise-to-give" class="term" title="A written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations—the recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional."><span>Promise to Give</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2018-08/" class="xref">Accounting Standards Update No. 2018-08</a></td><td class="entry">06/21/2018</td></tr><tr><td class="entry"><strong class="ph b">Prospective Rate Setting</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#public-entity" class="term" title="A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market."><span>Public Entity</span></a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/asc-pdf/GUID-EFA6D1D7-EED2-443D-BBD3-C6F2E960EBE3.pdf" class="pdf-link" target="_blank" rel="noopener">Maintenance Update 2014-20 (PDF)</a></td><td class="entry">09/29/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/p/#public-entity" class="term" title="A business entity or a not-for-profit entity that meets any of the following conditions: It has issued debt or equity securities or is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets). It is required to file financial statements with the Securities and Exchange Commission (SEC). It provides financial statements for the purpose of issuing any class of securities in a public market."><span>Public Entity</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr><tr><td class="entry"><strong class="ph b">Retrospective Rate Setting</strong></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/glossary/r/#revenue" class="term" title="Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations."><span>Revenue</span></a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"></td><td class="entry"></td><td class="entry"></td><td class="entry"></td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-05-1" class="xref">954-605-05-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-05-2" class="xref">954-605-05-2 through 05-14</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-05-2" class="xref">954-605-05-2</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-05-4" class="xref">954-605-05-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2012-04/" class="xref">Accounting Standards Update No. 2012-04</a></td><td class="entry">10/01/2012</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-25-1" class="xref">954-605-25-1</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-25-2" class="xref">954-605-25-2 through 25-9</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-25-4" class="xref">954-605-25-4</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-35-1" class="xref">954-605-35-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-45-1" class="xref">954-605-45-1 through 45-5</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-45-4" class="xref">954-605-45-4</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-45-5" class="xref">954-605-45-5</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-50-1" class="xref">954-605-50-1</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-50-2" class="xref">954-605-50-2</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-50-3" class="xref">954-605-50-3</a></td><td class="entry">Amended</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-23/" class="xref">Accounting Standards Update No. 2010-23</a></td><td class="entry">08/26/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-50-4" class="xref">954-605-50-4</a></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-50-4" class="xref">954-605-50-4</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-55-1" class="xref">954-605-55-1 through 55-4</a></div></td><td class="entry">Superseded</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2014-09/" class="xref">Accounting Standards Update No. 2014-09</a></td><td class="entry">05/28/2014</td></tr><tr><td class="entry"><div class="xref-range displayInline"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-55-1" class="xref">954-605-55-1 through 55-4</a></div></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-65-1" class="xref">954-605-65-1</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2010-23/" class="xref">Accounting Standards Update No. 2010-23</a></td><td class="entry">08/26/2010</td></tr><tr><td class="entry"><a href="https://asc.understandingaccounting.org/asc/605/954/#605-954-65-2" class="xref">954-605-65-2</a></td><td class="entry">Added</td><td class="entry"><a href="https://asc.understandingaccounting.org/updates/asu-2011-07/" class="xref">Accounting Standards Update No. 2011-07</a></td><td class="entry">07/25/2011</td></tr></tbody></table>

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## ASC 605-954-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/605/954/#05-overview-and-background)

SEC content: no

##### [605-954-05-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-1)

Pending content: no

Source downloaded (UTC): 2026-09-10T00:50:44.909Z to 2026-09-10T00:50:44.909Z

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Topic 606 on [revenue](https://asc.understandingaccounting.org/glossary/r/#revenue "Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.") from [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") with [customers](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.") provides guidance on revenue recognition for contracts with customers for health care entities within the scope of this Topic. This Subtopic provides recognition guidance for:

1.  a
    
    Charity care
    
2.  b
    
    Related fundraising entities.

##### [605-954-05-2](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-2)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-3](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-3)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-4](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-4)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-5](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-5)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-6](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-6)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-7](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-7)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-8](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-8)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-9](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-9)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-10](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-10)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-11](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-11)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-12](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-12)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-13](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-13)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-05-14](https://asc.understandingaccounting.org/asc/605/954/#605-954-05-14)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

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## ASC 605-954-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/605/954/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [605-954-15-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-15-1)

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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 954-10-15.

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## ASC 605-954-20: 20 Glossary

[Read section](https://asc.understandingaccounting.org/asc/605/954/#20-glossary)

SEC content: no

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## ASC 605-954-25: 25 Recognition

[Read section](https://asc.understandingaccounting.org/asc/605/954/#25-recognition)

SEC content: no

##### [605-954-25-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-1)

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This Section provides recognition guidance for the following:

1.  a
    
    [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).
    
2.  b
    
    [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).
    
3.  c
    
    [Charity care](https://asc.understandingaccounting.org/glossary/c/#charity-care "Charity care represents health care services that are provided but are never expected to result in cash flows. Charity care is provided to a patient with demonstrated inability to pay. Each entity establishes its own criteria for charity care consistent with its mission statement and financial ability.")
    
4.  d
    
    Related fundraising entities.

##### [605-954-25-2](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-2)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-25-3](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-3)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-25-4](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-4)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-25-5](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-5)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-25-6](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-6)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-25-7](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-7)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-25-8](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-8)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-25-9](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-9)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

#### Charity Care

##### [605-954-25-10](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-10)

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Charity care does not qualify for recognition as revenue in the financial statements. Distinguishing charity care from bad-debt expense requires the exercise of judgment. Only the portion of a patient's account that meets the entity's charity care criteria shall be recognized as charity.

##### [605-954-25-11](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-11)

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Although it is not necessary for the entity to make this determination on admission or registration of an individual, at some point the entity must determine that the individual meets the established criteria for charity care.

#### Related Fundraising Entities

##### [605-954-25-12](https://asc.understandingaccounting.org/asc/605/954/#605-954-25-12)

Pending content: no

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Distributions from a financially interrelated recipient entity to a nongovernmental health care entity that it supports shall generally be reported by the health care entity as a reduction of its interest in the recipient entity. However, if the distribution is made from net assets that are not includable in that interest because the health care entity does not have rights to them (that is, the recipient entity can determine to whom the assets will be distributed), the health care entity shall report a [contribution](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.") from the related recipient entity. See Example 2 in paragraphs

[958-20-55-8 through 55-13](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-8)

for an illustration of a health care foundation and the affiliated entities that it supports.

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## ASC 605-954-35: 35 Subsequent Measurement

[Read section](https://asc.understandingaccounting.org/asc/605/954/#35-subsequent-measurement)

SEC content: no

##### [605-954-35-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-35-1)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

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## ASC 605-954-40: 40 Derecognition

[Read section](https://asc.understandingaccounting.org/asc/605/954/#40-derecognition)

SEC content: no

##### [605-954-40-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-40-1)

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[Section not used](https://asc.understandingaccounting.org/updates/page-1833002/).

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## ASC 605-954-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/605/954/#45-other-presentation-matters)

SEC content: no

##### [605-954-45-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-45-1)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-45-2](https://asc.understandingaccounting.org/asc/605/954/#605-954-45-2)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-45-3](https://asc.understandingaccounting.org/asc/605/954/#605-954-45-3)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-45-4](https://asc.understandingaccounting.org/asc/605/954/#605-954-45-4)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-45-5](https://asc.understandingaccounting.org/asc/605/954/#605-954-45-5)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

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## ASC 605-954-50: 50 Disclosure

[Read section](https://asc.understandingaccounting.org/asc/605/954/#50-disclosure)

SEC content: no

##### [605-954-50-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-50-1)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-50-2](https://asc.understandingaccounting.org/asc/605/954/#605-954-50-2)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

#### Charity Care

##### [605-954-50-3](https://asc.understandingaccounting.org/asc/605/954/#605-954-50-3)

Pending content: no

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Management's policy for providing [charity care](https://asc.understandingaccounting.org/glossary/c/#charity-care "Charity care represents health care services that are provided but are never expected to result in cash flows. Charity care is provided to a patient with demonstrated inability to pay. Each entity establishes its own criteria for charity care consistent with its mission statement and financial ability."), as well as the level of charity care provided, shall be disclosed in the financial statements. Such disclosure shall be measured based on the provider's direct and indirect costs of providing charity care services. If costs cannot be specifically attributed to services provided to charity care patients (for example, based on a cost accounting system), management may estimate the costs of those services using reasonable techniques. For example, one such estimation technique might involve calculating a ratio of cost to gross charges, and then multiplying that ratio by the gross uncompensated charges associated with providing care to charity patients. Other reasonable techniques also are permitted. The method used to identify or estimate such costs shall be disclosed. Funds received to offset or subsidize charity services provided, for example, from gifts or grants restricted for charity care or from an uncompensated care fund, also shall be separately disclosed.

##### [605-954-50-4](https://asc.understandingaccounting.org/asc/605/954/#605-954-50-4)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

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## ASC 605-954-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/605/954/#55-implementation-guidance-and-illustrations)

SEC content: no

##### [605-954-55-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-55-1)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-55-2](https://asc.understandingaccounting.org/asc/605/954/#605-954-55-2)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-55-3](https://asc.understandingaccounting.org/asc/605/954/#605-954-55-3)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [605-954-55-4](https://asc.understandingaccounting.org/asc/605/954/#605-954-55-4)

Pending content: no

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

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## ASC 605-954-65: 65 Transition and Open Effective Date Information

[Read section](https://asc.understandingaccounting.org/asc/605/954/#65-transition-and-open-effective-date-information)

SEC content: no

##### [605-954-65-1](https://asc.understandingaccounting.org/asc/605/954/#605-954-65-1)

Pending content: no

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Paragraph superseded on 06/18/2012 after the end of the transition period stated in Accounting Standards Update No. 2010-23, _Health Care Entities (Topic 954): Measuring Charity Care for Disclosure_.

##### [605-954-65-2](https://asc.understandingaccounting.org/asc/605/954/#605-954-65-2)

Pending content: no

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Paragraph superseded on 06/17/2013 after the end of the transition period stated in Accounting Standards Update No. 2011-07, _Health Care Entities (Topic 954): Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities_.

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## ASC 605-954-75: 75 GAAP Taxonomy Elements

[Read section](https://asc.understandingaccounting.org/asc/605/954/#75-gaap-taxonomy-elements)

SEC content: no