301355 Flashcards
A nongovernmental not-for-profit animal shelter receives contributed services from the following individuals valued at their normal billing rate:
Veterinarian provides volunteer animal care $8,000
Board members volunteer to prepare books for audit 4,500
Registered nurse volunteers as receptionist 3,000
Teacher provides volunteer dog walking 2,000
What amount should the shelter record as contribution revenue?
$12,500
$14,500
$8,000
$11,000
$12,500
Contribution revenues and assets or expenses should be reported for donated services if:
special skills are required to perform the service,
the individual providing the service has those special skills, and
the organization would have to buy the services if they were not donated.
Therefore, $12,500 would be recorded as contribution revenue ($8,000 + $4,500 = $12,500).
Not-for-Profit Entity
According to the FASB ASC Glossary, a not-for-profit entity is distinguished from a business entity by three characteristics: contribution of significant resources from providers who do not expect proportionate return, operating purposes other than to provide goods or services for profit, and absence of ownership interests like business enterprises. In addition, the IRS stipulates that no part of the organization’s net earnings can inure for the benefit of any specific person or persons.
FASB ASC Glossary
IRS Form 1023
AICPA Audit and Accounting Guide Not-for-Profit Entities, Section 15.09
2122.11
Contributions must be distinguished from exchange transactions since the revenue recognition criteria are different for the two. Some items (e.g., membership dues) are exchange transactions for some organizations, contributions for others, and part exchange transaction and part contribution for still other organizations. (Membership dues are exchange transactions to the extent that the organization provides benefits or services of equal value to the members.) If the organization does not give anything in exchange for an increase in net assets, then the transaction would be accounted for as a donation.
FASB ASC 958-605-25-16
