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

When preparing the Statement of Cash Flows for a private not-for-profit organization,the direct or indirect method of may be used.

Which of the following would not be recognized as contribution revenue by a private not-for-profit organization?

Cash flows must be presented separately in the Statement of Cash Flows for the three classes (unrestricted,temporarily restricted,and permanently restricted).

A donor gave $100,000 to a foundation,which is financially related to a nongovernmental,not-for-profit organization.The foundation,which is also a nongovernmental,not-for-profit organization,would record the $100,000 as:

Towne Center Art Museum received the following contributions in 2012.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 $107,000.All of these are due within the year and it is estimated that 8% will ultimately prove to be uncollectible. (b)1,500 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 $24,000 and $5,000 (respectively)to construct a new exhibition area.Fixed assets are classified as unrestricted net assets. (d)On March 1,2012 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%).

Contributed service to private not-for-profit's is recognized as revenue/support if:

As of December 31,2011,The Halifax Fishing Museum had unrestricted cash of $46,000,building and land with a net book value of $190,000,and permanently restricted collections totaling $99,000.There were no liabilities.The Museum has two programs: Operation of a Fishing Museum and Educational Programs.During the year ended December 31,2012 the Museum incurred the following transactions: (1)Cash contributions to the Museum included (a)unrestricted $520,000,(b)restricted for educational programs $45,000 and (c)restricted by the donor for endowment purposes $150,000. (2)Additional unrestricted cash receipts included $19,900 in fees from individuals and organizations using the Museum building as a meeting facility.Included in this is $4,000 for a meeting to be held in January 2011. (3)Incurred cash expenses: (4)Purchased land for future expansion to the adjoining lot in the amount of $50,000. (5)Depreciation on the Museum building amounted to $45,000 and is allocated on the basis of square feet: $35,000 to Museum operations,$5,000 to Education Programs,and $5,000 to administration. (6)Outstanding purchase orders for administrative supplies at 12-31-09 totaled $3,000. Required: Prepare a Statement of Activities and Changes in Net Assets for the Museum for the year ended 12-31-2012.

Under FASB Statement No.116,multiyear pledges are to be recorded as a pledge receivable for the total amount and contribution revenue will be recorded proportionally each year of the pledge.

Examples of voluntary health and welfare organizations would include the Girl Scouts and the American Heart Association.

Which of the following is not correct with respect to mergers under the rules established by FASB Statement No.164,Not-for-Profit Entities: Mergers and Acquisitions?

An unconditional pledge of support is properly recorded as Temporarily Restricted Revenue at the time of the pledge.Changes in the present value of the receivable resulting from the passage of time is reported as:

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

Distinguish between an exchange transaction and a contribution.How is the accounting different for these two events?

What is the treatment of multi-year pledges as required by FASB Statement No.116?

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

A donor gave $500,000 to a private not-for-profit organization to be held in endowment.In addition,the governing board permanently designated $1,000,000 to the endowment.In the Statement of Financial Position,how should these amounts be classified?

The Statement of Cash Flows for a private not-for-profit organization has three different classifications of cash flows.

A Statement of Functional Expenses is required for state governments.

Contrast the reporting of mergers and acquisitions under the rules established by FASB Statement No.164,Not-for-Profit Entities: Mergers and Acquisitions?

With the exception of collections,fixed assets may be recorded by a private not-for-profit as: