NP-Support Revenues and Contributions Flashcards
A not-for-profit entity receives $150 from a donor. The donor receives two tickets to a theater show and an acknowledgment in the theater program. The tickets have a fair market value of $100. What amount is recorded as contribution revenue?
The amount of contribution revenue recognized in an exchange transaction is reduced by the fair market value of the consideration given by the organization to the donor. The $150 received is reduced by the $100 fair market value of the theater tickets for total contribution revenue of $50.
ABC Company transfers a building having a fair value of $800,000 to High Tech University, a private not-for-profit university, for $300,000 cash. High Tech should account for the building as follows:
Since the fair value of the building exceeded the amount High Tech University paid ABC for the building, a portion of the transaction should be accounted for as a contribution. The $300,000 portion that High Tech University paid ABC Company for the building should be accounted for as an exchange transaction. The $500,000 excess of the fair value of the building over the amount High Tech paid should be accounted for as a contribution. This transaction is an example of one that is in part an exchange and in part a contribution.
What is the formula for calculating net patient service revenue?
The most common deductions from revenue arise from the following:
(1) Contractual adjustments because of third-party insurer agreements or government regulations
(2) Discounts extended to doctors and nurses
(3) Bad debts
(4. ) Charity care services
Pahn, a nongovernmental not-for-profit organization, received an unconditional promise to give $50,000. The donor stipulated that the donation must be used in the next fiscal year. Pahn received and spent the $50,000 in the next year. For the current fiscal year, what element of Pahn’s statement of financial position will increase as a result of the unconditional promise to give?
A promise to give is recognized as receivable when it is unconditional or any conditions on the promise are met. Contributions receivables and contributions revenues are recognized in the period that unconditional contributions are made. Unrestricted contributions to be collected in the subsequent period or periods are reported as changes in temporarily restricted net assets because they are considered to have a time restriction.
In its fiscal year ended June 30, 20X1, Barr College, a large private institution, received $100,000 designated by the donor for scholarships for superior students. On July 26, 20X1, Barr selected the students and awarded the scholarships. How should the July 26 transaction be reported in Barr’s statement of activities for the year ended June 30, 20X2?
When the contribution was received in the prior fiscal year, it was recorded as an increase to temporarily restricted net assets. The restriction was met in the current year when the scholarships were awarded. When restrictions are met on temporarily restricted net assets, they are shown on the Statement of Activities as “net assets released from restrictions,” an increase in unrestricted net assets. The corresponding payment of the scholarships may be shown as part of unrestricted expenses. One method of showing this in the Statement of Activities is as follows:
Increase in unrestricted net assets as well as a decrease in unrestricted net assets
Which of the following best describes a situation in which an unconditional contribution should be recognized as revenue by a private not-for-profit organization?
Unconditional contributions, whether promised or received as cash, are recognized as revenue in the period received. Contributions revenue should be measured at fair value, not donor’s book value. Donor intentions to give, rather than unconditional promises, are not considered revenue.
The Turtle Society, a nongovernmental not-for-profit entity, receives numerous contributed hours from volunteers during its busy season. Chris, a clerk at the local tax collector’s office, volunteered 10 hours per week for 24 weeks transferring turtle food from the port to the turtle shelter. His rate of pay at the tax office is $10 per hour, and the prevailing wage rate for laborers is $6.50 per hour. What amount of contribution revenue should Turtle Society record for this service?
Contributions of services are recognized as revenues if they “create or enhance nonfinancial assets” or “require specialized skills” that would need to be purchased if not donated. Specialized skills are possessed by trained and often licensed or certified professionals. Turtle feeding does not require such specialized training or skills, and would not be paid for if Chris did not donate his time. Therefore, no revenue is recognized for Chris’s volunteered time.
Pica, a nongovernmental not-for-profit entity, received unconditional promises of $100,000 expected to be collected within one year. Pica received $10,000 prior to year-end. Pica anticipates collecting 90% of the contributions and has a June 30 fiscal year-end. What amount should Pica record as contribution revenue as of June 30?
not-for-profit entities must record unconditional promises to give as contributions revenue when the promise is made. Under FASB ASC 958-605-30-6, such contributions may be recorded at net realizable value, or net of any allowance for uncollectible pledges.
90,000
During 20X1, Jones Foundation received the following support:
•A cash contribution of $875,000 to be used at the board of directors’ discretion
•A promise to contribute $500,000 in 20X2 from a supporter who has made similar contributions in prior periods
•Contributed legal services with a value of $100,000, which Jones would have otherwise purchased
At what amounts would Jones classify and record these transactions?
The foundation should report unrestricted revenue of $975,000. This is the $875,000 contribution as well as the $100,000 in contributed services. The value of volunteer services is recognized as contributions insofar as the services require specialized skills, were provided by persons possessing those skills, and would typically have been purchased if not provided by donation.
A promise to contribute a specified amount to an organization should be recorded as income immediately upon receipt of the promise. Because the promised contribution ($500,000 in this scenario) will not be collected until the subsequent year, it should be considered temporarily restricted. Because the promised contribution is expected to be collected within one year of the financial statement date, it may be measured at net realizable value.
