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Elza [17]
3 years ago
8

A hospital estimates that, based on past experience, it will incur $5 million in malpractice claims as a result of services rend

ered in the current period. The hospital carries a malpractice insurance policy with a yearly $2 million deductible clause. The amount that should appear on its year-end financial statement as Claims Expense (Loss) should be
a) $0.b) $2 million.c) $3 million.d) $5 million.
Business
1 answer:
Gala2k [10]3 years ago
5 0

Answer:

d) $5 million.

Explanation:

The amount that should appear on the year-end financial statement should be the most probable estimate. In this case, $5 million is the most probable because this is deduced from past experience, while $2 million is a practice that should be reviewed in the light of new information.

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