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Memorial Hospital and Changes Related to Accounting for Leases

Macey Buker
January 1, 2016
North America
Accounting & Finance
3 pages
lease, accounting for leases, FASB Topic 842, lease reporting, FASB 2016-02
Student Price: 
$4.00 (€3.75)
Average rating: 

Memorial Hospital was part of a successful, for-profit, integrated healthcare organization. The hospital relied upon leases to finance equipment and real property. Pat Carter, chief executive officer, recently hired a new chief financial officer, Carla Johnson, to oversee the hospital’s finances. During a meeting, Carla informed Pat of a newly adopted accounting standard that altered the financial reporting requirements for leases. Pat asked Carla to evaluate the new standard, Number 2016-02 Leases (Topic 842), adopted by the Financial Accounting Standards Board (FASB), to see what effects the change might have on the hospital’s reporting requirements. Pat also wanted to know if there were any actions the organization could take in order to minimize the overall impact of the newly adopted standard.

Learning Outcomes: 
  1.  Evaluate the financial impact of changes in reporting requirements for leases based upon Topic 842
  2. Propose and defend alternative approaches that will reduce the potential impact of changes related to lease reporting