HFMA VIEWS

Ray Lefton, CPA
Vice President, Finance
Princeton HealthCare System

I want to alert you to a new accounting pronouncement FIN 47 described here. For an example worksheet that can be used for the calculation, click here. This will likely become an issue and a headache for you when you go through your year-end audit. 

I have a situation where we have a conditional agreement to sell the entire hospital campus (we hope to start construction of a new hospital next year), the sale price of the campus greatly exceeds the net book value, we have phase 1 studies completed and no environmental issues exist that require any sort of remediation. Like all buildings constructed before 1980 we have sealed asbestos insulated pipe fittings and asbestos in some floor tiles. Taking this to the abstract every asset has a limited life and at some future time will be discarded, razed and dumped. We are asked to estimate this conditional asset retirement obligation even though no issues exist in the foreseeable future, let alone estimatable. I am at a point of pulling a number out of the air that we will need 50 years from now.  Do readers have any pearls of wisdom for us? Given our situation, I have been debating the applicability of FIN 47 to our year-end statements.