Exam 12: Not-For-Profit Organizations

Assets without donor restrictions cannot be restricted, including by the governing board or other outside parties

All not-for-profit organizations, including city-owned museums and two-year community colleges, must adhere to FASB accounting and financial reporting standards.

Per FASB standards, not-for-profits must classify their net assets into three classes. What is the basis for distinguishing the three classes? What is the rationale for this basis? How is each class defined?

Grace Church, a not-for-profit entity, operates a school in connection with the church. This year members of the church decided to construct a new wing on the school with six classrooms. The church hired an architect and a construction supervisor. The bulk of the labor for construction was donated by church members who were willing workers but not necessarily skilled carpenters. Materials for the construction cost $600,000 and the paid labor was $200,000. The fair value of the completed building is $2 million. When the building is completed what should be the balance in the asset account "Building" and the account "Contributed revenue"?

Liquidity is reported by the not-for-profit with

United Charities accepted a contribution from a donor and agreed to transfer the assets to Aid for Friends, a not-for-profit that provides temporary shelter to the homeless. United Charities should debit cash or other assets and credit

A donor pledges $100,000 to the Shakespeare Foundation to be used only to support the summer Shakespeare Theater-an event that has been held every summer for 38 years. This is an example of a

Save the Children Foundation had the following types of cash receipts and disbursements during its current fiscal year. REQUIRED: Indicate in which categories each of these flows would be reported in the foundation's statement of cash flows. a. Unrestricted contributions b. Sales of handmade crafts c. Contributions restricted to capital asset acquisition d. Contributions to endowments e. Investment earnings on endowments, not required to be added to the endowment f. Salaries g. Interest paid on short-term loan h. Capital asset purchases i. Investments sold j. Short-term loan proceeds k. Contributions made to other organizations l. Capital lease payments.

Not-for-profit organizations should report interest and dividends earned and restricted for long-term purposes in which of the following cash flows categories?

Gifts restricted by the donor to not-for-profit organizations

Not-for-profit organizations report their cash flows in which of the following categories?

The Save the Animals Foundation received a gift of $500,000 from a donor who wanted the gift used to acquire habitat for endangered snails. The money may be invested but all earnings are restricted to habitat acquisition. During the year the entire gift was invested in corporate securities. At year-end, the securities had a value of $501,000. The appropriate way to recognize the change in fair value is

In December 2016, Technology University received a $2 million grant from the National Hockey Association to develop an effective neck brace to prevent injuries in its non-goalie hockey players. The NHA grant was intended to cover $1.5 million of direct costs and $0.5 million of overhead costs. The grant stipulated that the NHA would be the sole beneficiary of the research. Technology carried out the research in 2017. As anticipated, direct costs were $1.5 million. REQUIRED: a. What accounting entries, if any, should Technology make when notified of the grant? b. What accounting entries, if any, should Technology make in 2017? (Be sure to indicate in which funds the entries would be recorded.) c. Would your answer be different if the research were made available to the general public and not just the NHA? Explain. d. Would your answer be different if the NHA indicated it would not make any payments on the research until Technology delivered the final research product?

Revenues of a not-for-profit organization should be reported as

Temporarily restricted funds related to plant and equipment generally account only for resources restricted to their purchase or construction, not for the plant and equipment itself, which are typically reported in the unrestricted fund.

According to AICPA guidance, a not-for-profit organization (X) is required to consolidate a related not-for-profit organization (Y) in its financial statements when

Which of the following entities should recognize depreciation expense on its operating statement?

The basis of accounting used by not-for-profit organizations in their external financial reports is

In the statement of activities, FASB ASU 2016-14 requires net assets to be classified in one of the two categories of net assets - net assets without donor restrictions and net assets with donor restrictions.

The FASB requires that all not-for-profit organizations report expenses