The FAS 116 adjustment referenced in table 5.3-1 means that an adjustment is made for pledge receivable and recognition of interest revenues. St Jude’s hospital should credit donation revenue. Due to FAS 116, changes have been made to the accounting procedures for the contributions received by healthcare industries. For tax exempt organizations, the requirement of Financial Accounting Standard (FAS) 116 is the usage of the accrual method for accounting for pledged contributions. Changes from the hybrid method to the full accrual method are applied to tax exempt organizations. The receipt of cash under SFAS No. 116, results in a revenue donations accounting entry. A debit to equipment and a credit to revenue-donations would be the entry made when equipment is received as a donation.