F6 M4 Not For Profit Transfers of Assets and Other Accounting Issues

Question 1

what are financially interrelated organizations?

Answer 1

ability to influence the operating and financial decisions of the other and a continual economic interest in net assets of the other

Question 2

what is a not for profit recipient entity?

Answer 2

one who accepts resources from the provider and will use it on behalf of or transfer the assets to beneficiary

Question 3

explain an organization that is not financially interrelated and no variance power

Answer 3

do not have ability to direct assets to another beneficiary; assets are valued at fair value and a liability must be recognized because its assets owed to the beneficiary

Dr. Asset
Cr. Refundable advance liability

Question 4

when are transferred assets of a non financially interrelated with no variance power accounted for as a liability?

Answer 4

1) resource provider can change beneficiary
2) provider’s asset transfer is conditional or repayable
3) control beneficiary and specifies the unrelated beneficiary
4) specifies itself or related beneficiary and cannot use equity accounting

Question 5

explain an organization that is not financially interrelated and with variance power

Answer 5

have ability to direct assets to another beneficiary; assets are valued at fair value and contribution is recognized when received or disbursed to beneficiary

Dr. Asset
Cr. Contribution

Question 6

explain an organization that is financially interrelated and has or has no variance power

Answer 6

whether they have or have no ability to manage assets on behalf of particular beneficiary, assets valued at fair value and recognize contribution when received or disbursed to beneficiary

Dr. Asset
Cr. Contribution

Question 7

how does a beneficiary record assets to be received if no financial relationship or beneficial interest? (JE)

Answer 7

Dr. Receivable
Cr. Contribution

Question 8

when do beneficiaries recognize the assets in their books?

Answer 8

if the recipient does not have variance power

Question 9

when do beneficiaries recognize a beneficial interest of an asset from the recipient?

Answer 9

when the recipient and beneficiary are not financially interrelated

Dr. Beneficial Interest
Cr. Contribution

Question 10

when do beneficiaries recognize an interest in net assets of the recipient?

Answer 10

when the recipient and beneficiary are financially interrelated

Dr. Interest in recipient net assets
Cr. Change in interest in recipient net assets

Question 11

what is an endowment fund?

Answer 11

established to provide income to maintain the organization; can be board-designated (without restrictions) or donor-restricted and are reported in statement of financial position

Question 12

what is an underwater endowment fund?

Answer 12

a donor-restricted fund, whose fair value is less than the original gift amt or amt required to be maintained by donor or law

Question 13

what two ways are investment returns restricted by?

Answer 13

time or purpose

Question 14

how are underwater endowment funds reported?

Answer 14

any accumulated losses reported under net assets with donor restrictions

Question 15

name the disclosures to be reported for underwater endowment funds

Answer 15

1) fair value of underwater endowment
2) endowment’s original gift amt
3) deficiencies

Question 16

name the required disclosures for all endowments

Answer 16

1) board’s interpretation of requirements and ability to spend from underwater
2) policies of funds
3) investment policies
4) composition
5) recon of beg. and ending balance of endowments