White paper

Revenue recognition in the health care industry

Oct 30, 2023
Audit Health care Revenue recognition Financial reporting

In 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) to provide a robust framework and comprehensive principles for addressing revenue recognition issues. Additionally, the guidance on accounting for certain costs related to a contract with a customer in the scope of Topic 606 was codified in ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers.

This white paper, Revenue recognition in the health care industry, highlights aspects of the guidance that are particularly pertinent for health care entities, including the following topics:

  • Recognizing revenue for health care services provided to insured and uninsured patients
  • Accounting for third-party settlement adjustments
  • Recognizing revenue and certain costs related to continuing care retirement communities
  • Accounting for risk-sharing arrangements
  • Applying the guidance using a portfolio approach
  • Addressing the presentation and disclosure requirements

For additional information about all of the revenue recognition guidance, including those aspects discussed in this white paper, as well as numerous examples illustrating how to apply the guidance, refer to our publication, A guide to revenue recognition.

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