F6-NFP Revenue Recognition

Question 1

contribution revenue of the pledges receivable is recognized based on..

Answer 1

the net realizable value (net present value) at the date the pledge is made and (expected collection %) of the pledges receivable

DR Pledge receivable $100,000
CR Allowance for doubtful accounts $10,000
CR Contribution revenue (90% of the P/R) $90,000

Question 2

Rule: Cash contributions and unconditional pledges (promises) are recognized as…

Answer 2

contribution revenue in the year in which the cash or pledge is received (at fair value)

Question 3

Contributions available for use at the board’s discretion are classified as revenues and gains….

Answer 3

without donor restrictions

Question 4

Contribution revenues are only recognized when..

Answer 4

it is unconditional.

Question 5

When the donor restriction to be used in Y2, the contribution will be recorded in Y1…

Answer 5

as revenue, and it will be classified as contributions with donor restrictions and an increase in net assets with donor restrictions until the time period for the restriction has passed.

Question 6

If a received donation is conditional upon a non-profit organization’s raising matching funds from others to be paid back (payable) to the donor within a certain period, it is called

Answer 6

a good faith deposit with conditional promises and should be recorded as a liability called “refundable advance”. No revenue is recognized.

Question 7

Gifts without donor restrictions would be classified as…

Answer 7

nonoperating revenues.

Question 8

How do you record a contribution revenue when you send a gift a donor?

Answer 8

Contribution revenue = Total contribution received - Fair value of premiums

Question 9

When meet criteria (SOME), recognition of both the expense and the contribution revenue is required.
What is SOME?

Answer 9

Specialized skills that have been
Otherwise needed or purchased and
Measured
Easily (valued at fair value).

DR Expense
CR Contributions

Question 10

How major fundraising campaigns (an annual gala, auction, or a dinner) present revenues and expenses?

Answer 10

They will present revenues (Cr) and expenses (Dr) separately. Should not be netted together.

DR Cash
DR Expense 1
DR Expense 2
CR Revenues

Question 11

Bed debts is recognized as..

Answer 11

an expense, not as a contra-revenue

Question 12

Cash contributions recognized as revenues or gains in the period…

Answer 12

which they are received, measured at fair value at the date of the gift.

Question 13

Contributions of works of art, historical treasures, etc. need NOT to be recognized as revenue if they are..

Answer 13

protected by the organization, held by the organization for display and, if sold, the proceeds of the sale used for the acquisitions of other works.

Question 14

How healthcare organization recognizes the charity care?

Answer 14

Charity care is not recognizes as either revenue or expense on the financials of a health care organization.

Question 15

Patient service revenue is recorded on what basis?

Answer 15

on the gross basis.

Question 16

Define variance power for NFP accounting and reporting?

Answer 16

The unilateral authority to redirect assets to another beneficiary.