Or. Admin. R. 411-070-0400 - Equity

Equity is not an allowable expense for reimbursement but must be reported. Equity capital is the net worth of the provider (owner's equity in the net assets as determined under these rules), adjusted for those assets and liabilities that are not related to the provision of resident care:

(1) Generally accepted accounting principles are to be used unless otherwise specified in these rules for computing owner's equity.
(2) Assets and liabilities not related to providing resident care are not includable in the provider's equity capital.
(3) Loans from owners or related entities are considered as invested equity capital of the provider.
(4) Owner's equity in assets leased from related entities is includable in the equity capital of a proprietary provider.
(5) Goodwill is not includable as part of owner's equity.
(6) Invested funds that are diverted to income producing activities that are not resident related for more than six months will not be included as part of owner's equity.
(7) Amounts deposited in a funded depreciation account and the earnings on deposits are not included in equity capital. Interest earned on these funds is not offset against interest expense.
(8) Land, buildings, and other assets acquired in anticipation of expansion are not includable in equity capital. Construction-in-process and liabilities related to such construction are not includable in equity capital.
(9) Prepaid premiums on life insurance carried by a provider on officers and key employees, where the provider is designated as the beneficiary, are not included when computing equity capital.
(10) The costs of noncompetitive agreements are not includable in equity capital.
(11) The amount deposited and the earnings on self-insurance reserve funds are not includable in equity capital.
(12) When an asset is totally or partially destroyed by a casualty, the unrecovered loss is not included in equity capital.
(13) Working capital, defined as the difference between current assets and current liabilities, must be adjusted by any amount considered to be excessive for the necessary and proper operation of resident care activities. The excessive amount will not be included in equity capital.
(14) The cash surrender value of insurance is not includable in equity capital.
(15) Imputed salaries for proprietors will be offset in computing the equity capital.
(16) Any portion of an acquisition cost, incurred on or after July 18, 1984, that exceeds the depreciable basis is not includable in the owner's equity calculation.

Notes

Or. Admin. R. 411-070-0400
PWC 866(Temp), f. 12-30-77, ef. 1-1-78; AFS 19-1978, f. & ef. 5-1-78; Renumbered from 461-017-0395 by Ch. 784, OL 1981 & AFS 69-1981, f. 9-30-81, ef. 10-1-81; SSD 2-1985, f. & ef. 3-5-85; SSD 10-1986, f. & ef. 7-1-86; SSD 6-1993, f. 6-30-93, cert. ef. 7-1-93; SPD 9-2006, f. 1-26-06, cert. ef. 2-1-06

Stat. Auth.: ORS 410.070

Stats. Implemented: ORS 410.070

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