Exam 10: Financial Reporting for Not-For-Profit Organizations

The CICA Handbook requires large not-for-profit organizations to ________.

Baseball for All (BFA)is a non-profit organization that runs baseball tournaments and clinics for all ages.It also buys equipment that is needed at the tournaments.It receives government funding from the municipality and tournament and clinic fees that are paid by participants.Generally,annual revenues have been $350,000.This year,BFA received a special grant of $150,000 to buy new equipment.Equipment in the amount of $180,000 was purchased.The equipment is expected to last 5 years. Required: Discuss the various methods that BFA can use to record the purchase of the equipment allowed under Canadian GAAP and prepare the appropriate journal entries.As part of your explanation,explain the differences between the expenditure basis and expense basis of reporting.

A not-for-profit organization provides language training and homework assistance to immigrants.Most of the services are provided by volunteers and all the funds come from public donations.The primary objective in preparing financial statements for this organization is ________.

Big Research Foundation is a large non-profit organization that funds research into a variety of diseases.Annual revenues are in excess of $10 million.It has an endowment fund,a general fund and a capital fund.You have just been appointed treasurer on its Board and the accountant has come to you with a variety of questions. Required: Address each of the following questions,making sure that your advice complies with GAAP. 1.Big received a large endowment of $2 million on January 31,20X9.During the year ended 20X9,there was interest earned of $60,000. Prepare the journal entries required to record the receipt of the endowment and the interest earned. 2.During the year,1,500 volunteer hours were provided.The accountant has estimated that the value of this time is $37,500.The accountant stated that without the volunteers,Big would have had to hire employees to perform the work. Determine how the volunteer hours should be reported. 3.A large piece of research equipment was donated to the laboratory.The value of the equipment is $250,000 and it estimated to last about 10 years. Prepare the journal entries related to this donated equipment for the year.

What type of not-for-profit (NFP)organization may be allowed to use the restricted fund method?

Quick Care,a not-for-profit organization,received an externally restricted contribution.Quick Care does not have a separate restricted fund for the contribution.Under the restricted fund method,the contribution will be recognized as which of the following?

Jordan made a $100,000 contribution to the Appo Society,a not-for-profit organization.Jordan stipulated that his contribution is to be used for the organization's breakfast program in the next year.How should Appo record the contribution at the time of contribution?

In a not-for-profit organization,donated capital assets are recorded at what value?

Food for All (FFA)is a non-profit organization that has grown to be quite large in the area.FFA operates 25 food banks in multiple locations throughout the province and has moved to a decentralized organizational structure.All of the funding is received by the head office and then each location is allocated a fixed amount of funds that can be used over the year for local expenses.Local expenses are at the discretion of the local managers.The Board has decided to change its method of accounting to keep better track of costs at these various locations and better manage the budget.The Board has decided to implement a new budgeting and encumbrance accounting system. Required: 1.In October,20X9,FD issued a purchase order for $35,000 to have printed and delivered 100,000 pamphlets to be distributed to households over the next 6 months.In December,20X9,the pamphlets were received along with an invoice for $33,900.Prepare the journal entries to record the journal entries for October and December,20X9 using encumbrance accounting. 2.Identify when encumbrance reporting would be appropriate.Comment as to whether or not encumbrance reporting is appropriate for FFA.

Which of the following statements related to the accounting for donated goods and services for a not-for-profit (NFP)organization is true?

A not-for-profit organization is not required to capitalize and amortize its capital assets if the organization ________.

A museum has invested substantial funds in the past for its collection.During the year,the museum hired a new accountant who decided that the collection should have been capitalized and amortized to operations.The accountant needs the approval of the Treasurer to prepare the journal entries required to correct the previous financial statements. Required: You are the treasurer of this museum.Outline your response to the accountant.

Under the deferral method,how should contributions received in the current year but restricted for operating expenses for one or more future periods be reported in the current year?

Contributions received by NFP's may be restricted.Funds can be received in the form of endowment contributions,and contributions that are externally restricted by the donor or internally restricted by the Board. Required: Explain the differences between endowment contributions,contributions that are externally restricted by the donor or internally restricted by the Board.Discuss the accounting treatment for each type of restricted contribution if the NFP uses the deferral method of reporting.

For the 20X6 fiscal year,KU Care,a not-for-profit organization,received $300,000 in unrestricted donations and $175,000 in donations designated specifically for cancer research.$200,000 of the unrestricted donations and $100,000 of the restricted donations were expended in 20X6 for current operations and cancer research,respectively.KU did not set up a separate fund for the restricted donation.How much of the donations should be reported as revenue in the statement of operations for the 20X6 fiscal year?

The primary objective of using an encumbrance system is to keep track of an organization's ________.

Mr.Generous donated $100,000 to Excel Private School and specified that the principal amount not be spent but be maintained permanently.Interest on the invested funds can be used to award scholarships to those who excel in drama.How should the $100,000 contribution be presented on Excel Private School's financial statements?

Under the CICA Handbook,a large not-for-profit museum or art gallery ________.

One of the programs that the Tyger Society operates is a drug and alcohol awareness program for junior high school student across Canada.This is an example of _________.

For a not-for-profit organization,an expenditure is ________.