Acc 240 CH - 16 - SM - 9e
Acc 240 CH - 16 - SM - 9e
Acc 240 CH - 16 - SM - 9e
Question 16-4
SFAS No. 117 requires nongovernment, not-for-profit organizations to report net assets (assets
less liabilities) in three classes:
1.
2.
Temporarily restricted net assetsThe portion of net assets whose use is limited by
donor-imposed restrictions on the timing of use (e.g., pledges for future period giving
and term endowments) or purpose of use of the donated resources.
3.
Permanently restricted net assetsThe portion of net assets whose use is limited by
donor imposed restrictions that are permanent in nature, i.e., restrictions cannot be
fulfilled by either passage of time or other actions of the organization.
Question 16-5
A nongovernment ONPO should recognize contributions that are restricted by donors for fixed
asset acquisitions as revenue using the same criteria as for other contributions. These restricted
contributions should be recognized in the period that they are received or unconditionally
promised. (Net assets released from restrictions are reported when the fixed assets acquired are
placed in service.)
Question 16-6
The FASB defines collections as:
Works of art, historical treasures, or similar assets that are (a) held for public exhibition,
education, or research in furtherance of public service rather than financial gain, (b) protected,
kept unencumbered, cared for and preserved, and (c) subject to an organizational policy that
requires the proceeds of items that are sold to be used to acquire other items for collections.
The traditional logic for not depreciating collections is that they are inexhaustible. Collections
have not been required to be capitalized because determining a reasonable approximate dollar
amount at which to capitalize them may be impossible, or virtually so. Capitalization is
permitted. An entity that capitalizes collections may capitalize all collections or just those
acquired after adopting SFAS No. 116. Organizations that capitalize collections report
donated collections as assets and as contributions revenue at their fair value.
Question 16-7
At receipt, restricted gifts, contributions, and bequests to a nongovernment VHWO (or ONPO)
are reported as temporarily restricted contribution revenueincreasing temporarily restricted net
assets. Upon expenditure of the restricted resources, a nongovernment VHWO (ONPO) would
report any expenses incurred as changes in unrestricted net assets and reflect assets acquired in
In some cases, the motivation for this practice may be to justify reporting the costs of fundraising mailings as program expenses. Resource providers are interested in the ratio of fundraising expenses to total expenses as an indicator of the extent to which the entity's resources
are ultimately used for the entity's primary purposes. A lower ratio generally is better. In
other cases, it is a legitimate effort to minimize costs of both fund raising and program
efforts.
b.
Under GAAP, the costs of the mailings are an example of a joint activity. Costs of joint
activities must be reported as fund-raising activities unless the activity meets three tests
regarding the purpose of the activity, the audience to whom the activity is addressed, and the
actions that the audience is asked to take. If these three conditions--which indicate that a
legitimate program purpose is being served in addition to the fund-raising purpose of the
activity, the costs of joint activities that are identifiable with specific program or management
and general functions are allocated appropriately to those functions. Otherwise, all the costs
of the joint activity except the costs of direct benefits to donors are reported as fund-raising
expenses.
Question 16-9
Assuming that the pledges are unconditional at the time the pledge is received and that the first
installment of the pledge is to be received in the next fiscal year, revenues from the pledge should
be reported in the year the pledge is received even though nothing is collected. The revenues
should be reported as changes in temporarily restricted net assets since there is an implied time
restriction. The amount of revenues should equal the expected present value of the pledge.
Question 16-10
Expenses must be reported by program or function. These functional expenses are presented
within two major classificationsProgram expenses and Supporting Services expenses.
Program expenses are related directly to the primary missions of the organization. Supporting
services expenses do not relate directly to the primary missions of the organization. Supporting
services include management and general expenses, fund-raising expenses, and other costs not
associated directly with rendering program services.
Question 16-11
Conditional pledges are pledges that are made subject to provisions (conditions) that release the
donor from the obligation to give as a result of the occurrence or nonoccurrence of a future and
uncertain event. (If the probability of not meeting the condition is slight, the pledge is not
considered conditional.) Pledges that are not subject to such conditions are called unconditional
pledges.
Unconditional pledges are recognized as revenues in the period received. Conditional pledges are
not recognized as pledges until the condition is met or the probability of not meeting the condition
becomes slight. At that point, the pledge is either collected or becomes unconditionalor both
and should be recognized as revenue.
Recall that the timing of recognition of contribution revenues for pledges is not affected by
whether the pledge is restricted or unrestricted.
Question 16-12
Unrestricted contributions are available immediately for any legitimate use of the VHWO or
ONPO. Restricted contributions are required, implicitly or explicitly, by donors to be used for a
certain purpose or during or after a certain time period. (Some restrictions are permanente.g.,
permanent endowments.)
Restrictions have no effect on the timing of revenue recognition. They do determine the net asset
class in which the revenues are reported. Unrestricted contributions are reported as revenues in
the Changes in Unrestricted Net Assets section of the Statement of Activities. Contributions with
permanent restrictions are classified as Changes in Permanently Restricted Contributions. Other
restricted contributions are classified as Changes in Temporarily Restricted Contributions.
Question 16-13
Net assets released from restrictions is the term used to report the satisfaction of temporary
restrictions on the use of resources. Net assets released from restrictions are reported as
increases in Changes in Unrestricted Net Assets and as equal decreases in Changes in Temporarily
Restricted Net Assets in the year that the restriction is satisfied (and therefore the net assets
become unrestricted).
Question 16-14
Temporarily restricted contributions and temporarily restricted investment earnings are permitted
to be reported as revenues in the changes in unrestricted net assets if the restrictions are met in the
same year that the contributions or investment earnings are to be recognized as revenues AND if
the entity applies the policy to both of these revenue sources.
Question 16-15
a.
b.
c.
d.
Temporarily restricted revenues in the current year (because of an implied time restriction).
If received in the next year, net assets released from restrictions will be reported in that year.
Not reported as assets or revenues because the pledge is not unconditional. The pledge may
be disclosed.
Temporarily restricted revenues in the current year. Net assets released from restrictions will
be reported as expenses for community outreach are incurred.
Temporarily restricted revenues in the current year. Net assets released from restrictions will
be reported when the building is placed in service.
Question 16-16
Direct costs of holding a special fund-raising event that is reported gross may be reported as an
expense deduction from the revenuesjust as cost of goods sold is deducted from sales.
Alternatively, the direct costs may be reported in the expenses section of the statement of
activities. The cost of benefits such as meals that are provided to contributors may be reported as
part of a separate line item that identifies such costs. Other direct costs such as advertising should
be included in fund raising expenses.
Revenues from these events should be reported at the gross amount unless the event is incidental
or peripheral. In those cases, gains, not revenues, should be reported. Gains from special fundraising events may be reported gross or net of direct costs of holding the event. If special event
"gains" are reported net, the direct costs of the special event should be disclosed parenthetically.
Question 16-17
In order for an event to be recorded in the accounts it should be a viable revenue, contribution,
expense, etc., and should be objectively measurable. VHWOs and ONPOs have many volunteer
workersskilled and unskilled, helpful and in the way, etc. Too, some volunteers may be skilled
in one area, say medicine, but do volunteer work in arts and crafts or another area outside of their
special skill area. With so many volunteers with different skills, doing different thingssome
well, some poorlyat different times it becomes virtually impossible to put a reasonable dollar
value on much of the volunteer help.
Likewise, some donated materials are excellent and useful, while others are scrap. And some
donated clothing is virtually new and ideal for the season, but other donated clothing is little more
than rags. Further, some facilities that are made available for VHWO and ONPO functions are
private homes, office conference rooms, or other facilities that are not normally rented out. In all
these cases it is very difficult, if not impossible, to establish the fair value of the materials,
clothing, or facilities received or used.
Thus, both VHWOs and ONPOs are very restricted as to which donated materials, services,
facilities, etc., are given recognition as contributions and expenses (or assets) in the accounts and
financial statements. Those that can be objectively valued and are significant enough to warrant
the trouble of doing so are recognized; the rest are not, though they may be described in the notes
to the financial statements and data on them may be presented in supplemental schedules or
statistical reports.
2009 Pearson Education, Inc. publishing as Prentice Hall
91
SOLUTIONS TO EXERCISES
Exercise 16-1
1. b
2. b
3. b
4. c
5. d
6. d
7. a
8. a
9. c
10. b
Exercise 16-2
1. b
2. c
3. b
4. a
5. c
6. e
7. c
8. e
9. c
10. a
Exercise 16-3
1.
2.
3a.
Pledges Receivable..................................................................
250,000
Cash........................................................................................
1,250,000
Allowance for Uncollectible Pledges................................
Temporarily Restricted SupportContributions*...........
Unrestricted SupportContributions..............................
To record pledges and collections of pledges.
*The uncollected pledges receivable have an implied time restriction.
50,000
700,000
750,000
Cash........................................................................................
Permanently Restricted SupportContributions.............
To record permanent endowment gift.
300,000
300,000
ExpensesProgram X............................................................
Cash/Payables/Etc............................................................
To record expenses for specified program.
222,000
222,000
4.
Reclassifications Out...............................................................
Reclassifications In..........................................................
To record satisfaction of restrictions on restricted resources.
222,000
222,000
Exercise 16-4
1.
2.
3.
4.
5.
6.
Supplies Inventory..................................................................
Accounts Payable............................................................
To record purchase of supplies on account.
50,000
ExpensesSupplies................................................................
Supplies Inventory...........................................................
To record supplies used.
40,000
Equipment..............................................................................
Cash/Payables..................................................................
To record purchase of equipment.
16,000
Reclassifications Out...............................................................
Reclassifications In..........................................................
To record satisfaction of restrictions on restricted resources
16,000
Cash........................................................................................
Bonds Payable.................................................................
To record issuance of bonds.
1,000,000
Cash........................................................................................
Land................................................................................
Gain on Sale of Land.......................................................
To record sale of land.
45,000
Cash........................................................................................
Unrestricted RevenuesInterest Income.........................
To record unrestricted interest earnings. Note that even
Though the organization intends to use the earnings for the
same purpose . for which the principal of the gift is restricted,
the earnings are not donor-restricted.
6,000
50,000
40,000
16,000
16,000
1,000,000
33,000
12,000
6,000
Exercise 16-5
(a)
1.
2.
3.
Equipment..............................................................................
Cash.................................................................................
To record purchase of equipment.
30,000
ExpensesDepreciation.........................................................
Accumulated DepreciationEquipment..........................
To record depreciation.
12,000
Cash........................................................................................
Accumulated DepreciationEquipment.................................
Equipment.......................................................................
Unrestricted Gain on Sale of Equipment..........................
20,000
12,000
30,000
12,000
30,000
2,000
The depreciation expense decreases unrestricted net assets by $12,000 and the gain on the
equipment sale increases unrestricted net assets by $2,000.
Exercise 16-6
1.
Pledges Receivable..................................................................
Allowance for Uncollectible Pledges................................
Temporarily Restricted SupportContributions.............
To record pledges expected to be collected after
year end.
1,000,000
150,000
850,000
Even if the pledges are unrestricted they are reported as temporarily restricted unless the donors
specify that the pledge is intended to cover current year costs. Uncollected pledges have an implied
time restriction according to the FASB.
2.
3a.
3b.
Cash........................................................................................
Temporarily Restricted SupportContributions.............
To record temporarily restricted contributions.
3,000,000
2,200,000
Reclassifications Out...............................................................
Reclassifications In..........................................................
To record satisfaction of temporary use restrictions.
2,200,000
3,000,000
2,200,000
2,200,000
Exercise 16-7
Illustrative VHWO/ONPO
Statement of Activities
For the Year Ended December 31, 20X1
Unrestricted
Revenues and gains:
Contributions (net of uncollectibles
of $20,000)
Special events
Less: Direct costs of events
Membership dues
Investment income
Realized gains on sale of investments
$363,000
75,000
25,000
50,000
17,300
34,000
Temporarily
Restricted
Permanently
Restricted
$275,000
35,500
$55,000
10,500
$ 693,000
75,000
25,000
50,000
17,300
80,000
1,400
1,400
Total
10,000
445,000
(445,000)
919,300
(134,500)
66,900
851,700
103,800
184,000
287,800
103,800
184,000
287,800
171,200
91,000
262,200
550,000
369,300
417,000
$786,300
(134,500)
431,000
$296,500
66,900
345,000
$411,900
171,200
91,000
262,200
550,000
301,700
1,193,000
$1,494,700
*These amounts are from Illustration 16-6 on page 667 of the text.
Exercise 16-8
The American Red Cross
Statement of Activities
Year Ended June 30, 20X6
(in thousands)
Changes in Unrestricted Net Assets
Operating revenues and gains
Contributions:
Corporate, foundation and individual giving................................
United Way and other federated..................................................
Legacies and bequests..................................................................
Services and materials..................................................................
Grants..........................................................................................
Products and services:
Biomedical...................................................................................
Program materials........................................................................
Contracts, including federal government.............................................
Investment income (Note 7)................................................................
Other revenues....................................................................................
Net assets released from restrictions...................................................
Total operating revenues and gains..................................................
Operating Expenses:
Program Services:
Armed Forces Emergency Services..............................................
Biomedical services.....................................................................
Community Service ....................................................................
Domestic disaster services...........................................................
Health and safety services............................................................
International relief and development services...............................
Total program services ....................................................................
Supporting Services:
Fund raising ................................................................................
Management and general ............................................................
Total Supporting Services ...............................................................
Total operating expenses ............................................................
Change in net assets from operations .................................................
Nonoperating gains.............................................................................
Additional minimum pension liability...................................................
Change in unrestricted net assets......................................................
258,002
60,025
59,666
25,126
33,520
2,165,172
141,300
311,435
108,570
67,528
2,517,098
5,747,442
54,096
2,103,572
133,467
2,630,766
224,594
154,283
5,300,778
140,082
187,249
327,331
5,628,109
119,333
62,804
94,470
276,607
SOLUTIONS TO PROBLEMS
Problem 16-1
1a. Cash ............................................................................................
Unrestricted SupportContributions ..................................
To record cash contribution received.
3,000,000
400,000
3,000,000
b. ExpensesResearch ..................................................................
Cash ....................................................................................
To record research expenses.
400,000
400,000
3,000,000
400,000
3,000,000
400,000
400,000
3,000,000
400,000
3,000,000
400,000
Net assets released from restrictions are not reported until the assets are placed in service.
4.
In the first case, $3,000,000 of contributions revenue and $400,000 of operating expenses
will be reported in the Statement of Activities as Changes in Unrestricted Net Assets. For the
last two cases, the contributions revenue is reported under Changes in Temporarily
Restricted Net Assets. In addition, in the second case, net assets released from restrictions of
$400,000 is reported as an increase (the reclassification in) under Changes in Unrestricted
Net Assets and as a decrease (the reclassification out) under Changes in Temporarily
Restricted Net Assets and expenses in the second case are reported under Changes in
Unrestricted Net Assets.
As noted above, net assets released from restrictions are not reported in the final case until
the asset is completed and placed in service.
July 1
Equipment ................................................................
Cash or Vouchers Payable ..................................
To record equipment purchase.
47,300
Reclassifications Out...................................................
Reclassifications In..............................................
To record release of net assets from restrictions.
47,300
Cash ...........................................................................
Bonds Payable ....................................................
To record bond issuance.
10,000,000
Cash ...........................................................................
Temporarily Restricted Support
ContributionsDebt Service .......................
To record contributions restricted for debt
service.
800,000
Cash ...........................................................................
Accumulated DepreciationEquipment ....................
Equipment ..........................................................
Unrestricted Gain on Sale of Fixed Assets ..........
To record sale of equipment.
19,000
7,500
500,000
500,000
7,095
47,300
47,300
10,000,000
During 20X8
October 31
Dec. 31
800,000
25,000
1,500
500,000
500,000
7,095
Cash ............................................................................................
Temporarily Restricted SupportContributions .................
To record endowment gift.
2,000,000
1,000,000
2,000,000
1,000,000
Note that no reclassification is recorded at this point for the portion of the term endowment that
must be used for capital additions (i.e., plant asset additions) because a use restriction remains even
though the time restriction has been met.
(b)
1.
2.
Upon receipt, the Neuland Community Center should report the gift as temporarily restricted
revenues.
When the term of the endowment expires, the $1,000,000 that becomes available for
unrestricted use should be reported as net assets released from restrictionan increase in
unrestricted net assets and a decrease in temporarily restricted net assets.
Problem 16-3
Net Assets:
Permanently restricted ($50,000,000 + $1,500,000)...........................
Temporarily restricted:
For research ................................................................................
For scholarships ..........................................................................
For plant assets ...........................................................................
For endowment ...........................................................................
For future years ..........................................................................
$ 51,500,000
10,000,000
4,000,000
5,000,000
2,000,000
1,300,000
22,300,000
Unrestricted .......................................................................................
32,000,000*
$105,800,000
*Certain portions of unrestricted net assets are committed to specific purposes, as follows:
Designated for plant expansion ...............................................................
$ 3,000,000
Required by bond indenture to be used for plant expansion.....................
4,500,000
Invested in fixed assets ($17,000,000 - $1,500,000)................................
15,500,000
Undesignated ..........................................................................................
9,000,000
Total unrestricted net assets.............................................................
$32,000,000
Problem 16-4
West Texas Zoological and Botanical Society
Balance Sheet
December 31, 20X5
Assets
Cash ($350,000 - $50,000)............................................................................................
Accounts receivable (net of $20,000 allowance for uncollectibles).................................
Pledges receivable (net of $100,000 allowance for uncollectibles)..................................
Inventories....................................................................................................................
Investments* ($15,000,000 - $2,800,000 - $1,200,000).................................................
Assets restricted for plant purposes................................................................................
Assets restricted for endowment.....................................................................................
Land, buildings and improvements, and equipment (net of
$10,000,000 accumulated depreciation)............................................................
Other assets...................................................................................................................
Total Assets.....................................................................................................
Liabilities and Net Assets
Liabilities:
Accounts payable..........................................................................................................
Accrued expenses payable.............................................................................................
Unearned revenues........................................................................................................
Long-term debt..............................................................................................................
Total Liabilities................................................................................................
Net Assets:
Permanently restricted...................................................................................................
Temporarily restricted for:
Specific operating purposes..............................................................................
Plant expansion................................................................................................
Total temporarily restricted.......................................................................
Unrestricted:
Invested in plant...............................................................................................
Undesignated....................................................................................................
Total unrestricted......................................................................................
Total net assets.................................................................................................
Total Liabilities and Net Assets................................................................
300,000
100,000
600,000
300,000
11,000,000
1,200,000
2,850,000
28,000,000
150,000
$44,500,000
$ 525,000
100,000
75,000
6,000,000
6,700,000
2,850,000
5,500,000
1,200,000
6,700,000
22,000,000
6,250,000
28,250,000
37,800,000
$44,500,000
*Assumes that all assets restricted for plant purposes are investments. Also, permanently restricted net assets
for Endowment of $2,850,000 less $50,000 cash means $2,800,000 of investments are for endowments.
Note that the equality of total liabilities and total temporarily restricted net assets is coincidental and unusual.
Also, note that the amounts shown as liabilities for deferred support and deferred capital additions are in fact
temporarily restricted net assets as reported here, since restrictions on use do not defer revenue recognition.
Finally, cash, investments, and other assets restricted for plant purposes or endowment must be reported as
separate line items as presented in the solution, not as part of the general cash or investments accounts.
Problem 16-5
2,000,000
1,850,000
1,500,000
600,000
100,000
80,000
320,000
200,000
400,000
54,000
90,000
450,000
600,000
4.
Equipment ..................................................................................
Cash ....................................................................................
To record equipment purchased from restricted resources.
300,000
40,000
65,000
185,000
700,000
500,000
2,465,000
600,000
900,000
600,000
1,694,000
600,000
300,000
5,000
100,000
850,000
Cash ............................................................................................
Land and Building Held for Resale ......................................
To record sale of land and building given to support Program D.
850,000
100,000
100,000
300,000
60,000
17,500
13,500
9,000
11,250
11,250
100,000
250,000
7.
8.
850,000
850,000
75,000
125,000
300,000
60,000
10,000
7,500
45,000
50,000
300,000
$313,000
25,000
30,000
30,000
398,000
120,000
150,000
270,000
55,000
9,000
64,000
334,000
64,000
635,000
$699,000
$ 49,000
5,000
9,000
1,000
100,000
500,000
100,000
$764,000
$ 51,000
2,000
12,000
65,000
500,000
3,000
14,000
17,000
88,000
12,000
82,000
182,000
699,000
$764,000
Problem 16-7
Organization Name
Statement of Activity
For Fiscal Year 20X7
Changes in Unrestricted Net Assets
Revenues and gains
Contributions......................................................................................
Special events ....................................................................................
Less: Direct costs of special events ..................................................
Membership dues ...............................................................................
Investment income .............................................................................
Total revenue and gains ..............................................................
Net assets released from restrictions *................................................
Increase in unrestricted net assets ...............................................
Expenses:
Program Services:
Research ($3,500,000 + $1,750,000)..........................................
Community Service ....................................................................
Total Program Services .......................................................
Supporting Services:
Management and general ............................................................
Fund raising ................................................................................
Total Supporting Services ...................................................
Total expenses .....................................................................
Net increase in unrestricted net assets ..................................
Changes in Temporarily Restricted Net Assets
Contributions...............................................................................
Investment income ......................................................................
Net assets released from restrictions *.........................................
Increase in temporarily restricted net assets ................................
Changes in Permanently Restricted Net Assets
Contributions ..............................................................................
Realized gains on sale of investments ..........................................
Increase in permanently restricted net assets ........................
5,000,000
3,000,000
2,100,000
900,000
1,800,000
3,000,000
10,700,000
11,700,000
22,400,000
5,250,000
3,000,000
8,250,000
700,000
1,000,000
1,700,000
9,950,000
12,450,000
14,600,000
2,700,000
(11,700,000)
5,600,000
4,000,000
950,000
4,950,000
23,000,000
34,400,000
$57,400,000
Computations:
Net assets released from restrictions:
Qualifying research expenses ...............................................
Fixed asset purchases ...........................................................
Expired term endowment ....................................................
Total .............................................................................
$3,500,000
7,000,000
1,200,000
$11,700,000
700,000
2,300,000
600,000
11,000,000
$14,600,000
$ 3,000,000
9,400,000
22,000,000
$34,400,000
Problem 16-8
KINDNESS COOPERATIVE
Statement of Activities
For the Year Ended December 31, 20X7
Changes in Unrestricted Net Assets
Revenues and gains
Contributions...............................................................................
Special events .............................................................................
Less: Direct costs of special events ...........................................
Membership dues ........................................................................
Investment income ......................................................................
Donated materials........................................................................
Donated facilities.........................................................................
Donated services..........................................................................
Gain on sale of equipment............................................................
Total revenue and gains .......................................................
Net assets released from restrictions *.......................................
Increase in unrestricted net assets .................................
Expenses:
Program Services:
Research...............................................................................
Education.............................................................................
Total Program Services ................................................
Supporting Services:
Management and general
($151,200,000 + $20,000,000)......................................
Fund raising .........................................................................
Total Supporting Services ............................................
Total expenses ..............................................................
Net increase in unrestricted net assets ..........................
Changes in Temporarily Restricted Net Assets
Contributions........................................................................
Investment income ...............................................................
Net assets released from restrictions *..................................
Decrease in temporarily restricted net assets ................
$335,000,000
$75,000,000
25,000,000
50,000,000
17,300,000
34,000,000
10,000,000
8,000,000
10,000,000
10,000,000
474,300,000
313,800,000
788,100,000
103,800,000
184,000,000
287,800,000
171,200,000
91,000,000
262,200,000
550,000,000
238,100,000
275,000,000
35,500,000
(313,800,000)
(3,300,000)
55,000,000
10,500,000
1,400,000
66,900,000
301,700,000
1,300,000,000
$1,601,700,000
Problem 16-9
Mark Meadows Foundation
Statement of Activity
For the Year Ended December 31, 20X6
Changes in Unrestricted Net Assets
Revenues and gains
Contributions ($3,000,000 - $250,000)...............................................
Special events ....................................................................................
Less: Direct costs of special events ..................................................
Membership dues ...............................................................................
Investment income .............................................................................
Total revenue and gains ..............................................................
Net assets released from restrictions *................................................
Increase in unrestricted net assets ...............................................
Expenses:
Program Services:
Community service ($220,000 + $2,110,000)..............................
Public presentations.....................................................................
Education....................................................................................
Total Program Services .......................................................
Supporting Services:
Management and general ............................................................
Fund raising ................................................................................
Total Supporting Services ...................................................
Total expenses .....................................................................
Net increase in unrestricted net assets ..................................
Changes in Temporarily Restricted Net Assets
Contributions ($250,000 + $1,000,000 + $1,500,000).................
Investment income ......................................................................
Net assets released from restrictions *.........................................
Increase in temporarily restricted net assets ................................
Changes in Permanently Restricted Net Assets
Contributions ..............................................................................
Increase in net assets .......................................................................
Net Assets, January 1.......................................................................
Net Assets, December 31..................................................................
*
$2,750,000
$290,500
97,500
193,000
75,000
83,400
3,101,400
910,000
4,011,400
2,330,000
555,000
200,000
3,085,000
253,000
95,000
348,000
3,433,000
578,400
2,750,000
320,000
(910,000)
2,160,000
10,000,000
12,738,400
1,703,000
$14,441,400
$ 220,000
555,000
135,000
$ 910,000
Problem 16-10
Reclassifications Out...........................................................................
Reclassifications In..........................................................
To record satisfaction of restriction on net assets.
2.
3.
50,000
50,000
Pledges Receivable..................................................................
Allowance for Uncollectible Pledges................................
Unrestricted SupportContributions..............................
Temporarily Restricted SupportContributions.............
To record pledges.
600,000
Cash........................................................................................
Allowance for Uncollectible Pledges.......................................
Pledges Receivable..........................................................
To record collections and write-offs of pledges receivable.
480,000
7,000
60,000
405,000
135,000
487,000
If a student assumes that the pledges collected were included in Temporarily Restricted Support
either in the current year or in a prior year--a reclassification entry should be made at this point.
4a.
4b.
5.
6.
7a.
7b.
22,000
17,000
Cash........................................................................................
Unrestricted SupportMembership Dues.......................
To record collection of membership dues.
400,000
Cash........................................................................................
Temporarily Restricted SupportContributions.............
To record restricted gifts.
30,000
ExpensesCommunity OutreachSalaries...........................
ExpensesCommunity OutreachEquipment Rental...........
Cash.................................................................................
To record salaries and equipment rentals.
3,000
15,000
Reclassifications Out...............................................................
Reclassifications In..........................................................
To record satisfaction of restriction on net assets.
18,000
22,000
17,000
400,000
30,000
18,000
18,000
Note that when expenses are incurred for purposes for which restricted resources are available, the
restriction has been satisfied even if management uses unrestricted resources to pay those expenses.
2009 Pearson Education, Inc. publishing as Prentice Hall
111
Cash........................................................................................
Pledges Receivable..................................................................
Temporarily Restricted SupportContributions.............
To record restricted gifts to finance recreation
center construction.
500,000
2,200,000
2,700,000