What is the journal entry you need to do for a consolidation?
*Common stock
*APIC
*Retained earnings
*Assets (at FMV)
*Goodwill
*Investment
*Gain
When can services be included on the statement of activities?
Can be included if they are a professional service that is essential and the not for profit would have paid for them otherwise (ex: accounting)
How do you account for acquirer and acquiree in the year of acquisition?
Acquirer: Book income for the whole year
Acquiree: Book income from the date of acquisition (prospective)
What is the equation to figure out non-controlling interest?
Market share price x # shares held by non-controlling interest
What are the four financial statements required for a not for profit hospital?
- Statement of financial position (balance sheet)
- Statement of changes in net assets (or equity)
- Statement of cash flows
- Statement of operations (activities)
How do you record a contribution if you are an “agent?”
*Cash
*Refundable advance (liability)
What types of transactions are included in the financing section on a statement of cash flows for a not for profit?
Proceeds from DONOR RESTRICTED contribution (ex: endowment fund, any contribution with restrictions that will not lapse)
Money restricted for a long term purpose (Ex: payment on bonds, note payable, money restricted for endowment, PP&E)
Any long term contribution
What is an unconditional pledge and how is it accounted for?
It is a unconditional promise to give.
Can be accrued in the period which it was made, but required an allowance of doubtful accounts to offset. Record at present value.
What are the journal entries for when a not for profit receives an endowment and it then earns interest?
When we received the endowment
*cash
*revenues - donor restricted
When we earn interest income
*cash
*revenues - NOT donor restricted
What are supporting activities?
Activities secondary to the mission. Includes:
Membership development (costs associated with members)
Fundraising (printing and mailing pledge cards, maintaining donor list)
Management and General (marketing, tax prep, budgeting)
What are program activities?
Activities that further the mission of the not for profit
What are the steps to eliminating an intercompany issuance of bonds?
- Eliminate the bond payable and associated discount or premium
- Eliminate the investment on the buyer’s books
What is the special rule for art, artifacts, and antiques for a not for profit?
A not for profit can exclued the asset from the financial statements if;
- The asset is displayed or used for research purpose AND
- It is cared for by the not for profit AND
- When it is sold the money is reinvested in collectibles
What is the journal entry for when a not for profit receives a contribution with donor restriction?
*cash
*revenues - donor restricted
What are the steps to eliminating an intercompany sale of PP&E?
- Reverse the sale on the seller’s side
- Reverse the sale on the buyer’s side
- Reverse any excess depreciation that was taken while the asset was on the buyer’s books
How do you get the end number on a statement of operations for a hospital and what does each category include?
Patient service revenue (gross amount)
- Provisions for implicit price concessions and contractual adjustments (medicare, employee discounts)
Net patient service revenues
+ Other operating revenues (donated medical supplies, restricted grants, nonmedical revenue like gift shop)
- Operating expenses (credit losses, drugs, doctor salaries, etc)
Results from operations
+ Nonoperating revenues (donated services, unrestricted donations and grants, etc)
Excess of revenues/gains over expenses/losses (performance indicator)
What types of transactions are included in the investing section on a statement of cash flows for a not for profit?
Investments acquired/sold
PP&E acquired/disposed of
What is the calculation to get the end number of a statement of activities?
Public support (donations, grants)
+ Revenues (earned money like membership dues and investment income)
- Program expenses
- Support services
Excess of revenue over expenses
What type of transactions are included in the operating section on a statement of cash flows for a not for profit?
Revenues collected (both with or without a donor restriction)
Expenses paid
Divident income
Interest income/expense
What is included on the statement of activities for a not for profit?
Revenues, gains, other support (ex: contributions, investment income)
What is an conditional pledge and how is it accounted for?
Conditional promise to give.
Book as a liability until you meet the condition. Once the condition is met you can book it as revenue.
What is the criteria to deem a service “essential” to a not for profit?
- It creates or enhances a non-financial asset
- The service requires a specialized skill
What is the equation to figure out goodwill or gain on bargain purchase?
FV consolidation
+ FV previously held in acquiree
+ FV non-controlling interest
- FV net identifiable assets for the acquiree
Goodwil or gain on bargain purchase
What are the three basic financial statements for not for profit accounting?
Statement of financial position
Statement of activities
Statement of cash flows
