Exam 15: Accounting for Colleges and Universities

Nongovernmental (private) colleges and universities should follow FASB standards; governmental (public) colleges and universities should follow GASB standards.

Under GASB standards, public colleges and universities are considered general purpose governments.

A split-interest agreement is when the university and another beneficiary share in the benefits from a donor's gift.

Refunds of college or university tuition or fees should be recorded as expenses in the period in which they are made. Do you agree? Why or why not?

It would not make economic sense for a university to accept a split-interest agreement in which a fixed annuity is payable to the donor if:

Colleges and universities frequently present outcome measures rather than output measures.

Colleges and universities will report tuition waivers as either a contra-revenue account or an expense, depending on the purpose for which the waiver is given.

During the years ended June 30, 2020 and 2021, Jackson University, a private university, conducted a cancer research project financed by a $1,000,000 gift from an alumnus. The entire amount was pledged by the donor on July 10, 2019. The gift was restricted to the financing of this particular research project. During the two-year research period, Jackson's gift receipts from the alumnus and research expenses related to the research project were as follows for each fiscal year (FY): How much had net assets with donor restrictions increased as of the end of FY 2021?

The Academy, a private college, provided tuition waivers of $500,000. Of the amount $200,000 was for students teaching courses as graduate assistants and $300,000 was simply an award for scholastic accomplishments. Another $100,000 was given is tuition refunds. What amount would The Academy record as Tuition and Fees Discounts and Allowances?

For each of the following definitions, indicate the key term from the list that best matches by placing the appropriate definition. A. Term endowments B. Annuity agreements C. Collections D. Pooled life income agreements E. Spending rate F. Total return ________1. Agreements to pay the donor the income earned by assets donated to an organization over the specified beneficiary's lifetime ________ 2. A comprehensive measure of the rate of investment return, which includes unrealized and realized gains and losses, as well as interest and dividend income ________ 3. A contribution that must be retained intact until the happening of a specific event or the passage of a stated period of time ________ 4. The proportion of total return that may prudently be used by an institution for current purposes ________ 5. Agreement to pay stipulated amounts periodically to the donor of assets by the recipient organization

GASB accounting and reporting standards applicable to public colleges and universities:

Manthei University, a private university, has provided the following information concerning selected transactions. Prepare in general journal form the entries required for each of the transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) 1. The university was awarded a federal grant in the amount of $1,800,000 to be used for a specified research project (determined to be a nonexchange transaction). During the year the entire $1,800,000 was received and expenses for the specified project totaled $1,000,000. 2. Ira Beaker, a renowned chemist and alumnus, donated $7,000,000 to be used for the construction of new chemistry building to be named Beaker Hall. The gift is to be paid to the university in equal installments over a two-year period; the sum for the current year was received in cash. 3. Cash outlays of $2,750,000 were made during the year for construction in progress on the new chemistry building. Other construction projects completed during the year, also financed by restricted resources, amounted to $1,500,000 for buildings and $500,000 for improvements other than buildings. There was no debt financing used for these projects. 4. During the year bonds with a face value of $180,000 were retired.

Cactus College, a small private college, received a research grant from NACUBO to study whether service efforts and accomplishments measures improve institutional performance. In accordance with FASB standards the grant would be reported as an increase in:

Which of the following receipts may properly be accounted for as an increase in net assets without donor restrictions by a private college?

The National Association of College and University Business Officers (NACUBO) provides second-tier GAAP for private colleges and universities.

A college has collected returnable dormitory room deposits from students. How would these deposits be reported by the college?

An alumnus donates securities to a private college and stipulates that the principal be held in perpetuity and income from the securities be used for faculty travel. Dividends received from the securities should be recognized as increases in:

Both public and private universities report an infrastructure classification.

The FASB requires that private colleges and universities prepare which of the following financial statements?

"Tuition and fees should be recorded as revenues of colleges and universities even though they must be reported net of tuition refunds, scholarships, and fellowships." Do you agree or disagree with this statement? If you disagree, explain how refunds, scholarships, and fellowships should be recorded.