How to Record Patient Assistance Program Grants
Recording the cost of medical devices provided at no charge to patients through a company-sponsored Patient Assistance Program (PAP).
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Patient Assistance Program Expense | dr | 12,000.00 | - |
| Finished Goods Inventory | cr | - | 12,000.00 |
💡 Accountant's Note
When devices are provided for free as part of a charitable mission, the cost (not the list price) of the inventory is reclassified from an asset to an operating expense, specifically labeled for social responsibility or patient support.
Practitioner & Systems Framework
💻 ERP Architecture
Zero-dollar sales order processing with a specific reason code to trigger the expense reclassification.
⚠️ Audit Flags
Classification of PAP costs as R&D or Marketing instead of a separate social program account.
📄 Required Documentation
Patient eligibility verification forms and shipping confirmation to the patient/clinic.
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Expert Analysis by Qusai Ahmad
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