Problem

Evaluating Items for a Hospital’s Statement of OperationsSmallville Community Hospital, a...

Evaluating Items for a Hospital’s Statement of Operations

Smallville Community Hospital, a not-for-profit hospital, has a number of items to be evaluated to determine their proper placement on the hospital’s statement of operations (either above the performance measure of Excess of Revenues over Expenses or below the performance measure). It is possible that an item need not be reported on the hospital’s statement of operations.

	Items	Where Reported
1.	Bad debts expense.	A. Above the performance
2.	Donated supplies used in patient care.	measure line
3.	Unrestricted investment interest income.	B. Below the performance
4.	Gain on sale of hospital assets.	measure line
5.	Net assets released from restriction for acquisition of	C. Not reported on the
	equipment.	statement of
6.	Net assets released from restriction for use in hospital	operations
	operations.
7.	Gain on sale of permanently restricted endowment
	investments that the donor requires to be permanently
	restricted.
8.	Investment interest income that donor restricted for use in
	medical care education programs, which the hospital plans
	to begin next year.
9.	Pledges for a new hospital building wing to be constructed
	next year.
10.	Revenue from cafeteria sales.
11.	Donations of specialized, professional-quality services.
12.	Depreciation expense on hospital equipment.
13.	Resources designated by the hospital board of directors to
	be set aside for the new hospital wing.
1 4.	Gift of new heart-monitoring equipment received.
15.	Charity care provided by the hospital in accordance with
	its state charter.
1 6.	Contractual adjustment to the normal service charge for
	persons covered by an insurance company’s health insurance.
17.	Proceeds of a bond issue for the new wing.
1 8.	Purchase of new operating tables for the operating rooms.
19.	Recognition of unrealized holding gain for change in
	market value of investment securities. Income is in excess
	of amounts designated for current operations.

Required

Select the proper letter from the Where Reported column to match each item in the left-hand column. If an item is presented in two or more places on the statement of operations, provide the correct answer for each placement.