The Oakland County Hospital performs lots of work for Medicare and Medicaid patients. This results in both reimbursement of certain operating costs and some profit. “Transfers” among related subsidiaries within the Hospital also contain some Medicare and Medicaid “profits.” For example, the pharmacy, nursing and anesthesiology subsidiaries often all participate in a Medicare and Medicaid surgical operation. When the Hospital prepares consolidated financial statements, it asks you whether the Hospital should “eliminate” gains on such transactions—especially if others consider such transactions as dealings with “regulated affiliates.”

Answer rating: 100% (QA)

The hospital should not eliminate gains on suc... View the full answer