HealthCare, Inc.,* operates a number of medical testing facilities around the United States. Drug manufacturers, such as Merck and Bristol-Myers Squibb, contract with HealthCare for testing of their newly developed drugs and other medical treatments. HealthCare advertises, gets patients, and then administers the drugs or other experimental treatments, under a doctor’s care, to determine their effectiveness. The Food and Drug Administration requires such human testing before allowing drugs to be prescribed by doctors and sold by pharmacists. A typical contract might read as follows:
HealthCare, Inc., will administer the new drug, “Lexitol,” to 50 patients, once a week for 10 weeks, to determine its effectiveness in treating male baldness. Merck will pay HealthCare, Inc., $100 per patient visit, to be billed at the conclusion of the test period. The total amount of the contract is $50,000 (50 patients x 10 visits x $100 per visit).
Given these kinds of contracts, when should HealthCare recognize revenue—when contracts are signed, when patient visits take place, when drug manufacturers are billed, or when cash is collected?
ORDER YOUR 100% PLAGIARISM FREE CUSTOM PAPER. Given these kinds of contracts, when should HealthCare recognize revenue