Nonreciprocal Transfers

Question 1

Conditional pledges

Answer 1

The nonprofit has to wait until the condition has been met to record the revenue

The amount of revenue recorded is the net amount of the pledge expected to be collected within one year.

Question 2

Unconditional pledges

Answer 2

The nonprofit can recognize the revenue in the period the pledge is made

Question 3

Variance power

Answer 3

To choose the beneficiary of the donation

The NFP records the donation at fair value, if it is granted variance power

If not, NFP is an intermediary and records a liability until the donation is transferred to the beneficiary.

Question 4

If the donation isn’t a financial donation,

Answer 4

The NFP doesn’t recognize the donation on its financial statements

Question 5

A regular endowment

Answer 5

When an external party donates money with the stipulation that the endowment amount has to remain intact forever. This would be classified as net assets with donor restrictions

Question 6

If the donor wants the earnings of the endowment

Answer 6

The earnings are restricted and classified as net assets with donor restrictions

Question 7

No restriction on earnings

Answer 7

Net assets with no donor restrictions

Question 8

Term endowment

Answer 8

Endowment made to a nonprofit with the stipulation that it is invested for a specific period of time and can then be spent. Net asset with donor restrictions.

Question 9

Quasi endowment

Answer 9

An amount set aside by the governing of the nonprofit because it could also be spent by the governing body, these endowments are still considered net assets with no donor restriction

Question 10

Split interest agreement

Answer 10

When a nonprofit shares benefits in a trust with a donor or some other third-party these can be revocable or irrevocable.

Question 11

Nonprofits account for all investments at

Answer 11

Fair value

Question 12

Gains and losses are reported as

Answer 12

Changes to unrestricted net assets unless there is a donor-imposed restriction nonprofits do NOT use AFS or other investment classification

Question 13

Contributions that are conditional

Answer 13

Nonprofit has to wait until the condition has been met.

If received before condition has been met it is a liability until the condition is met.

Question 14

Intermediary

Answer 14

Nonprofit will then transfer the donation to another beneficiary

Question 15

Unilateral right to redirect

Answer 15

The nonprofit gets to pick the beneficiary of the donation, then the nonprofit will recognize the donation as contribution revenue.

Question 16

If the nonprofit is not granted unilateral variance power

Answer 16

Then the contribution is recorded as a liability, because the nonprofit is simply transferring it to some other beneficiary.

Question 17

Collections of works of art or historical treasures do NOT have to be capitalized if:

Answer 17

The items are held for public exhibition, education, or research

AND they are protected and preserved

AND they are subject to a policy that required proceeds of items sold to be used to purchase other items for the collection

Question 18

Donated Services must be reported at fair value as BOTH an expense and revenue if:

Answer 18

The services donated require specialized skills that would have otherwise been purchased

AND the person possesses those skills

AND the value of the services can be measured