Acme Healthsource, Inc.
Case Description: This case contains a revenue recognition problem that can be adapted to a number of accounting courses. The case has applications at the undergraduate level in intermediate accounting and at the graduate level in a theory or current financial problems or even a tax research course. Generally students can research the case in one or two weeks outside of class. At the undergraduate level, 15-20 minutes of class discussion typically suffices. At the graduate level, 45 minutes is usually a minimum.
Case Synopsis: Acme Healthsource, Inc. has expanded its healthcare operations by opening two retirement centers. These retirement centers have created an accounting problem because patients are allowed (in some instances, required) to pay a deposit upon entering the retirement center. The deposit keeps the patients' monthly rental at the same level throughout their stay, even if the level of care increases dramatically. There are two types of deposits, and each contains a refundable and non-refundable portion. The case focuses on the proper revenue recognition of these deposits.
Allied Academies International Conference
Clark, S. J.,
Jordan, C. E.,
(1998). Acme Healthsource, Inc.. Allied Academies International Conference, 5, 23-24.
Available at: https://aquila.usm.edu/fac_pubs/21313