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The New York Museum of Art is a private, not-for-profit organization. It receives a gift of a painting worth $1 million on the date of the gift, which qualifies as a work of art or historical treasure. How will this donation be recorded by the museum?
While ordinary donations are recorded as assets and revenue at fair value at the time of the donation, items that qualify as artworks or historical treasures are treated differently. The organization can choose to report them as they would any other asset, or not report them at all, since these assets typically don't provide future economic benefits.
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Which of the following statements is not required to be prepared by a private, not-for-profit organization?
The required statements for non-profit organizations included the statement of financial position, the statement of activities and changes in net assets, and the statement of cash flows. There is no such thing as the statement of unrestricted net assets.
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A private, not-for-profit organization receives a gift of a sculpture worth $1.5 million on the date of the gift. The sculpture qualifies as a work of art or historical treasure. Which of the following is not a requirement that must be met before the sculpture can be omitted as an asset for reporting purposes?
In order to exclude an asset in its reporting, the organization must be holding the asset for public exhibition, education, or research; must protect and preserve the asset; and musts using any sale proceeds to acquire a new collection item. While many of these such assets do have an extraordinary life, it is not a requirement for this type of reporting.
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On a not for profit entity's statement of activities, which of the following amounts should not be netted together under any circumstances?
While peripheral or incidental events may be presented on a net basis, major fundraising campaigns will present revenues and expenses separately.
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A man donated securities with a cost of $20,000 and a fair market value of $50,000 to a local theatre. His tax deduction was limited to $30,000. At what amount should the theatre record the securities at the date of donation?
Donated securities are recorded at $50,000 the fair value when received. Contributions are measured at their fair value at the time of the gif, the securities are measured at fair value.
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Expenses for a nongovernmental non for profit organization can be classified as:
Functional classifications can be allocated by program and support services while natural classifications are aligned to account such as salary, supplies, etc.
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Healthy Families is a private, not-for-profit organization. In Year 2, Healthy Families receives a check for $30,000 to be used to help low-income families in the area access medical care. In Year 3, the money is paid to a local doctor who provided medical care for several families that could not afford the treatment themselves. What will Health Families report in unrestricted net assets in Year 3?
The receipt of the check will increase unrestricted net assets by $30K and the payment to the doctor would use and therefore decrease unrestricted net assets.
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A private, not-profit organization receives a cash gift of $2 million in Year 1. The donor of the funds specified that the money should be invested, with all earnings on the investment being used to pay the salaries of a team of social workers. In the first year, $100,000 was earned on the investment but it was not spent as specified until Year 2. How will this be reported in the statement of activities and changes in net assets in Year 2?
When the $100K is earned, it is originally recorded as a restricted asset because it is restricted in its use. In Year 2, when the organization is ready to spend the earnings for their intended purposes, it reclasses the $100K to unrestricted assets before using the funds. The organization will record salaries expense for the social workers as well.
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A private, not-for-profit university receives a donation of a building in the beginning of Year 1 with a fair value of $1 million. The university plans to use the building as an office for student organizations, although the donor has not placed any restrictions on its use. The university's policy is to depreciate buildings via the straight line method over a 40 year life with no anticipated residual value. The university does not have a policy to place an assumed time restriction on these donations. Which of the following is true about this gift in Year 1?
This asset is reported as an unrestricted net asset at its fair value because no restriction has been placed by the donor.
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A statement of financial position for a nongovernmental non for profit organization reports amounts for which of the following classes of net assets?
In the statement of financial position for a non for profit organization, net assets are classified as with or without donor restrictions.
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The ABC museum, a not for profit organization, received a contribution of historical artifacts. It need not recognize the contribution if the artifacts are to be sold and the proceeds used to:
An entity need not recognize contributions of works of art if the donated items are added to collections that are held for public exhibit, are protected, and are subject to organizational policies that require the proceeds of sale to be used to acquire other items for the collection.
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Of the following, which would be listed on a non for profit entity's balance sheet?
This is a trick question as the financial statements for non for profit entities and governmental entities are different from standard US GAAP corporate financial statements.
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The Professional Accountants Group is a private, not-for-profit organization that has 1,000 members. Each member pays $400 per year for their membership and receives benefits with a fair value of $120 as benefits of membership. How should the Professional Accountants Group report the revenue received from its members?
Only the portion of members fees that cover the fair value of benefits received are recorded as dues revenue (1K members x $120 per member). The remainder is recorded as contribution revenue (1K members x the difference of $280 per member).
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Homer Company made a gift of $50,000 to a national art museum with the specification that the gift be conveyed to a local art festival. The museum does not have the power to change the beneficiary and Homer did not retain the right to revoke the gift or change the beneficiary. How should the museum report the receipt this gift?
This is reported as a liability to the museum, because the museum is obligated to pay the gift to another beneficiary.
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On December 1, Year 1, the Gregory Corporation makes a donation of $100,000 to the Family Services Foundation, a private not-for-profit organization. Gregory requests that Family Services give the money to The Soup Kitchen, another not-for-profit organization, but allows Family Services to give the money to another organization if it seems more appropriate. On December 23, Year 1, Family Services gives the money to The Soup Kitchen. When will each organization recognize the gift as contributed support?
Family Services recognizes the gift as contribution revenue when the gift is received, because it has the option to choose which organization to give the money to. The Soup Kitchen will also recognize contribution revenue (from Family Services) when it receives its gift.
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ABC, a nongovernmental non for profit organization, is preparing its year end financial statement. Which of the following statements is required?
Non for profit corporations are required to produce the following financial statements: Financial position, activities, and cash flows.
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ABC, a community foundation, incurred management and general expenses during year 1. In ABC's statement of activity for the year end, the management and general expenses should be reported as:
These are part of supporting services rather than program services.
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Of the following, which would be included as a part of total net assets in the statement of financial position for a nongovernmental non for profit entity?
Net assets for non for profit entities are classified as with and without donor restrictions.
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