Not-for-profit Flashcards
(12 cards)
What happens when a company transfer a building or an asset to a Not-for-profit entity?
if the fair value of the building or asset is HIGHER than what the not-for-profit entity paid,
then the amount “extra” of the fair value of the building will be counted as CONTRIBUTION
and what was paid will be an EXCHANGE TRANSACTION
What you should know about funds that the principal amount can’t be touch, but only use the interest for a specific purpose?
1) These funds are restricted revenue
2) Usually these accounts will last forever
3) if fair value of the fund grew, this will be added with the gain of interest into net assets
What is unrestricted revenue?
When resources are under control of the governing board and not specifically restricted by an outside donor
What happens with not-for-profit that are used as intermediary?
If the intermediary has the right to do anything with the money (donor said to give the money to another entity with no discretion),
then it will be recognize as restricted support or revenue.
This will increase in assets and increase in liabilities
What you should know about not-for-profit organization and interest paid in a statement of cash flows (using the indirect method)?
It should be reported as a supplemental disclosure of cash flow information
In the indirect method, it does not report interest payments as a separate line item in the operating activities of the statement of cash flows
Where do Investment in debt securities in a nongovernmental not-for-profit entity are reported?
Quoted Market Price
Because that is the source where you get the actual available fair value information
Contribution of services shall be recognized if one or both of the following services is received.
a) create or enhance nonfinancial assets
b) require specialized skills and are provided by a person that has those skills - and would typically need to be purchased if not provided by donation
It will be reported as an increase in both expenses and contributions
Financial statements prepared by a voluntary health and welfare nongovernmental not-for-profit organization must report expenses how?
BOTH FUNCTIONAL AND NATURAL
What happens between contribution revenue 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 the total contribution revenue of $50
Equity in a not-for-profit entity is reported in two categories:
net assets with donor restrictions
net asset without donor restrictions
Things to know about conditional pledges
1) is a promise to donate
2) Conditional promises (pledge) must be recognizes as revenue when the pledge conditions are met
nongovernmental not-for-profit organization regarding the statement of cash flows:
a lot of activities are operating activities,
here are some operating activities:
Cash paid to employees and suppliers
grants paid
cash collected on contribution receivable
cash received from service recipients
