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
(2) Assets and liabilities
not related to providing resident care are not includable in the provider's
(3) Loans from
owners or related entities are considered as invested equity capital of the
(4) Owner's equity in
assets leased from related entities is includable in the equity capital of a
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
(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
(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.
The cash surrender value of insurance is not includable in equity
(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.
Or. Admin. R.
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.
Stat. Auth.: ORS
Stats. Implemented: ORS