When governmental hospitals receive contributions that include eligibility requirements, the hospital only recognizes revenue when it has met those eligibility requirements. If the government receives cash, it reports the cash as a liability until the eligibility requirements are met.

Question

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Contributions to governmental hospitals that include eligibility requirements are not recognized until those requirements are met. If contributions are received before a government meets eligibility requirements, the resources are reported as liabilities.

When Governmental Hospitals Receive Contributions That Include Eligibility Requirements, the Hospital