A hospital estimates, based on past experience, that it will incur $5 million in malpractice claims as a result of services rendered in the current period.The hospital carries a malpractice insurance policy with a yearly $2 million deductible clause.The amount that should appear on its year-end financial statement as Claims Expense (Loss)should be

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The hospital estimates that it will incur $5 million in malpractice claims, but because it has a deductible clause of $2 million, the actual amount that the insurance company will cover is $3 million. Therefore, the Claims Expense (Loss) on the year-end financial statement should be $3 million.

A Hospital Estimates, Based on Past Experience, That It Will