F8/M5 NFP Revenue Recognition

Question 1

Contributions

Answer 1

Non reciprocal transfer of cash to a new owner in a manner that is voluntary

• Reported as unrestricted or restricted in the period received

Question 2

Contributions are classified as revenue if it is part of the major or central ongoing activities of the NFP

Answer 2

True

Question 3

Contributions are classified as gains if it is incidental to the purpose of the organization

Answer 3

True

Question 4

Cash contributions

Answer 4

Received = revenue

Question 5

Unconditional promise (pledge)

Answer 5

Date of pledge = revenue

Question 6

Conditional promises (pledge)

Answer 6

Earned = revenue

Question 7

Good faith deposits are a refundable advance until earned

Answer 7

True;

Conditional promises

Question 8

Multiyear pledges (recorded at NPV when pledge is made)

Answer 8

Cash received now = revenue

Cash received later = temporarily restricted revenue

Question 9

Split interest contribution

Answer 9

FV at date of acquisition

• Est. based on PV of future distributions
• Temporarily restricted

Question 10

Donated Services (SOME)
- Record @ FV

Answer 10

Specialized
Otherwise needed
Measurable
Easily

Question 11

JE for Donated Services

- repair of a roof is an expense, not an asset

Answer 11

Dr: Expense or Asset
Cr: Contributions - Unrestricted

Question 12

Donated Collection items

Answer 12

Do not need to be recorded if

• Publicly available
• Collection is maintained (protected)
• Proceeds from sale of art would buy more art

Question 13

Donated materials

Answer 13

Dr: Asset
Cr: Contribution -support

Question 14

Donated materials that pass through the organization

Answer 14

Dr: Expense
Cr: Unrestricted contributions - supplies

Question 15

JE Unconditional Pledge Receivable with implied time restriction

Answer 15

Dr: Pledge receivable - temporarily restricted
Cr: Allowance
Cr: Contributions - temporarily restricted

Question 16

*…JE When collected

Then….

** JE to move it when restriction is released**

Answer 16

Dr: Cash - temporarily restricted
Cr: Pledge receivable - temporarily
restricted

Dr: Satisfaction of time restriction -
temporarily restricted
Cr: Cash - Temporarily restricted

Dr: Cash - Unrestricted
Cr: Satisfaction of time restriction -
temporarily restricted

Question 17

Restricted Contributions (Still revenue in period received)

Answer 17

Dr: Pledge receivable
Cr: Allowance
Cr: Contributions - temporarily restricted
net assets

Dr: Reclassification - satisfaction of
requirements
Cr: Cash / restricted net assets

Dr: Unrestricted net assets
Cr: Reclassification - satisfaction of
requirements

Dr: Operating expense
Cr: Unrestricted net assets

Question 18

Fundraising revenue

Answer 18

Total contribution received

(-) cost of gift

Question 19

How to calculate gross revenue from tuition

Answer 19

Assessed student tuition and fees
(-) Cancelled classes
(=) Gross revenue (Unrestricted net assets)

• Scholarships and tuition wavers are expenditures

Question 20

Revenue recognition health care organization (net patient service revenue)

Answer 20

Charity care is not recorded as revenue

Amount billed 
(-) charity care
(-) policy discounts 
(-) adjustments
(-) bad debts

Question 21

Types of revenue for a VHWO

Answer 21

1. Patient service revenue
2. Other operating revenue
   
   • Donated supplies (donated medicine)
   • parking fees
   • tuition from schools
3. Non-operating
   
   • Donated services
   • Unrestricted gifts
   • Unrestricted grants