D is corrent. According to the Audit and Accounting Guide for Health Care Entities, the net realizable value of health care receivables is determined by subtracting estimates of contractual adjustments, other adjustments, and the allowance for uncollectibles. Estimates of contractual adjustments, other adjustments, and the allowance for uncollectibles are reported in the period during which the services were provided even though the actual amounts may become known at a later date. Therefore, all three of the allowances stated in the question would be deducted from gross health care receivables to determine their net realizable value.
A is incorrect because allowance for uncollectible accounts would be deducted.
B is incorrect because allowance for contractual adjustments would be deducted.
C is incorrect because allowance for employee discounts would be deducted.
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