ENDOSCOPY OPERATIONS OF THE ENDOSCOPY CENTER OF OCALA, INC.
NOTES TO THE FINANCIAL STATEMENTS
PERIOD FROM JANUARY 1, 1996 THROUGH AUGUST 21, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Endoscopy Center operations of the Endoscopy Center of Ocala, Inc. (the
"Center") provides outpatient endoscopy procedures at its center in Ocala,
Florida. It is organized as part of an associated physician practice. These
financial statements reflect the operations of the Center only, and do not
include activities of the physician practice.
a. Revenue Recognition
Revenues consist of the billing for the use of the Center's facilities (the
"usage fee") directly to the patient or third party payor. The usage fee does
not include any amounts billed for physicians' services which are billed
separately by the physicians to the patient or third party payor. Revenues are
reported at the estimated net realizable amounts from patients, third-party
payors and others, including Medicare and Medicaid. Such revenues are recognized
as the related services are performed. Contractual adjustments resulting from
agreements with various organizations to provide services for amounts which
differ from billed charges, are recorded as deductions from patient service
revenues. During the period from January 1, 1996 through August 21, 1996,
approximately 62% of the Center's revenues were provided to patients covered
under Medicare and Medicaid. Amounts which are determined to be uncollectible
are charged against the allowance for uncollectible accounts.
Depreciation on furniture and equipment is provided on the declining
balance method over the estimated useful life of the respective assets.
c. Income Taxes
No provision for income taxes has been reflected as the Center's operations
are included with the physician practice and all such federal taxes are paid by
the physicians through an election to be taxed pursuant to Subchapter S of the
Internal Revenue Code.
d. Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from the estimates.
2. RELATED PARTY TRANSACTIONS
The Center occupies space provided by the physician practice. Included in
the statement of income is a charge of $76,000 for such costs which management
believes reflects the fair value of the space provided.
All cash receipts and disbursements related to the Center are made through
bank accounts maintained by the physician practice. Revenues and expenses
related to the Center's operations are separately identified and recorded in the
records of the Center. The net cash transactions of the Center are reflected as
net cash paid to physician practice in the accompanying statement of cash flows.