Exam 11: College and University Accounting Private Institutions

A Pooled life income fund is a split-interest agreement.

According to NACUBO guidelines, what is the correct treatment for recognizing summer school revenues and expenses when a college's fiscal year ends on June 30?

Private colleges and universities use the same accounting and reporting standards as other private not-for-profit organizations.

The equity section of the balance sheet for private, not-for-profit colleges and universities includes which of the following designations?

Ethan Allen University is a private university following FASB standards for reporting. The following transactions took place during the year ended June 30, 2009. (1) EAU had received $520,000 in tuition in June 2009 for the summer session that runs from June 16 to August 14, 2008 and had deferred $ 390,000 (75%) at June 30, 2008. (2) EAU received in cash tuition of $2,890,000; unrestricted contributions of $320,000; contributions permanently restricted by donor agreement for the endowment of $ 700,000, unrestricted interest income on endowments of $250,000; and auxiliary enterprise revenue of $2,500,000. (3) Contributions for student scholarships were received in the amount of $340,000. $290,000 was awarded to students during the year. Students receiving these scholarships are required to work 10 hours a week (institutional support). (4) Expenses amounted to $1,400,000 for instruction, $800,000 for research, $600,000 for public service, $2,000,000 for auxiliary enterprises, $300,000 for student services and $890,000 for institutional support. Included in these amounts is $460,000 of depreciation. All other expenses ($ 5,530,000) were paid in cash. Plant assets are classified as unrestricted. (5) EAU received $580,000 in tuition in mid June 2009 for the summer session ending in mid August 2009. (6) At year-end, endowment investments were determined to have a fair value of $54,000 in excess of their recorded amounts. No restrictions apply to this income. Required: (a) Prepare journal entries to record these events including closing entries. (b) Prepare a Statement of Unrestricted Revenues, Expenses and Other Changes in Unrestricted Net Assets. (c) Prepare a Statement of Activities for the year ending June 30, 2009, assuming the June 30, 200810 balances in net assets are: $2,050,000 unrestricted, $830,000 temporarily restricted and $4,000,000 permanently restricted.

Inflows from self-supporting university operations, known as auxiliary enterprises, are restricted as to use.

On January 1, 2009, Antioch College, a private not-for-profit college, received $2,000,000 in cash to purchase an electron microscope. The microscope was delivered on July 1, 2009 and payment was made. The microscope is expected to last 5 years and has no salvage value at the end of that time. The fiscal year end is December 31. (a) Record the journal entries required on January 1, July 1 and December 31, 2009 to record the receipt of the cash, the purchase of equipment and one half year's depreciation, assuming the plant assets are recorded as unrestricted assets at the time of purchase. (b) Record the journal entries required on January 1, July 1 and December 31, 2009 to record the receipt of the cash, the purchase of equipment and one half year's depreciation, assuming the plant assets are recorded as temporarily restricted assets at the time of purchase.

College and universities treat uncollectible accounts as bad debt expense.

A Charitable lead trust is a split-interest agreement.

If the receivable for a student is $8,000 and the student pays only $500 as the result of receiving an assistantship from the school, what would be the appropriate debits.

What is the basis of accounting for a private college or university and what are the principal sources of reporting standards?

The private college would:

The three classes of net assets required to be presented by a private college or university are:

For private colleges and universities, reclassifications of temporarily restricted and unrestricted net assets could be made:

A Research grant program is a split-interest agreement.

Funds that are restricted for a certain number of years and then released are considered to be quasi-endowments and are classified as temporarily restricted funds.

Not-for- profit organizations must recognize revenue in the year in which the unconditional pledge is made.

Under NACUBO guidelines, tuition waivers associated with athletic or academic scholarships should be reported as:

Funds that are restricted for a certain number of years and then released are considered to be term endowments and are classified as temporarily restricted funds.

FASB standards require private college and universities to use encumbrances.