Exam 10: Accounting for Private Not-For-Profit Organizations

Uptown Church received a donation of marketable equity securities from a church member. In reviewing the financial press, it is determined that the securities had appreciated during the year. At what amount should Uptown report its marketable equity securities in the year-end balance sheet?

Centerville Art Museum received the following contributions in 2009. Prepare journal entries to record these events and any year-end adjusting journal entries resulting from the events. (a) Unrestricted pledges of support were received in the amount of $70,000. All of these are due within the year and it is estimated that 10% will ultimately prove to be uncollectible. (b) 1,200 Memberships were sold to the public in the amount of $40 each. Membership provides the individual with a monthly magazine and other benefits. The estimated fair value of member benefits is $25. The member year runs from July 1 to June 30. (c) A local carpenter donated supplies and labor with values of $14,000 and $5,000 to construct a new exhibition area. Fixed assets are classified as unrestricted net assets. (d) On March 1, 2009 a local businessman made a pledge payable in a future period. The pledge is restricted in purpose and has a present value of $140,000 (effective interest rate of 8%).

Under FASB Statement 117, reclassifications of net assets are not made:

Assets that are restricted by an organization's board can be reported as either temporarily restricted or permanently restricted, according to the board's intentions.

The Statement of Functional Expenses:

The financial statements of not-for-profits are intended primarily for use by present and potential donors.

Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. Care sold equipment for $30,000 which cost $40,000 and had a book value of $25,000 at the time of sale. In recording the sale, Care should:

Which of the following organizations does not follow the AICPA's Not-for-Profit Guide?

Donated services should be considered revenue if the service creates or enhances a nonfinancial asset and requires a specialized skill which would have had to be purchased if not donated.

After the issuing of Statement 117, not-for-profit financial statements are relatively standardized across industries.

Which of the following statements is false with respect to not-for-profit organizations?

The GASB has the authority to establish accounting and financial reporting standards for state and local governments and private sector not-for-profit organizations.

Accounting practices of private sector not-for-profit organizations are influenced by two AICPA audit and accounting guides: Not-for-Profit Organizations and Health Card Organizations.

Under which of the following conditions is it appropriate for a not-for-profit to allocate the cost of mass mailings from fund raising to a program related activity, such as Public Education?

Which of the following pledges of support would not be recognized in the year the pledge was made?

An intention to give is the same as an unconditional promise to give and can be recorded as revenue when the intention is made known.

Which of the following are the net asset classes required by the FASB for not-for-profit organizations?

Identify three types of restrictions placed on temporarily restricted net assets and outline the accounting requirements for each type.

Contributions to be paid in future periods should be recorded at present value.

Not-for-profit organizations are not required to record depreciation expense.