F9-NFP Flashcards
Contribution classified as
Generally, the difference between the fair value of purchases and the amount transferred
Cash contributions and unconditional pledges are recognized
are recognized as contribution revenue in the year in which the cash or pledge is received.
ot-for-profit corporations are required to produce the following financial statements:
Statement of Financial Position
Statement of Activities
Statement of Cash Flows
A promise to contribute is restricted
until conditions (collection) or eligibility requirements (date, etc.) have been satisfied.
Restricted donations are released from restriction when
conditions or eligibility requirements have been satisfied. The Baker Fund has satisfied the restriction on $95,000 by spending the money on program expenses.
Not-for-profit organizations are considered financially interrelated organizations in the event that one of the organizations:
Is both able to influence the operating and financial decisions of the other AND has an ongoing economic interest in the net assets of the other.
Donated property is recorded
at its fair market value and is recognized as support on the Statement of Activities .
The expense categories used by not-for-profit organizations generally fall under two main headings:
program services and support services.
Program services
directly related to the mission of the organization
Support services
Support services typically involve items such as fund raising, administration, management, and membership development.
Fundraising
contemplates inducing potential donors to contribute to the entity
Investing activities in the statement of cash flows should include
proceeds from the sale of long lived assets or insurance proceeds associated with the loss of long lived assets.
Contributions to a non-profit include transactions
are unconditional (not requiring a future event to occur), non-reciprocal, voluntary, and not of an ownership investment.
A not-for-profit organization needs to report its expenses in the statement of activities by
their functional classification (program classification, supporting activities, fund-raising, etc.). This method helps donors and others in assessing an organization’s service efforts.
restricted to acquisition of property.
financing activities
Donated services are recognized if the services received either
(1) create or enhance non-financial assets, or (2) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.
A not-for-profit organization prepares a Statement of Activities that presents
Changes in unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.
The not-for-profit entity has no variance power
the receipt is accounted for as a liability, not as a contribution on the Statement of Activities.
An entity need not recognize contributions of works of art, historical treasures, and similar assets if the donated items meet all of the following conditions:
Are held for public exhibition, education, or research in furtherance of public service rather than financial gain.
Are protected, kept unencumbered, cared for, and preserved.
Are subject to an organizational policy that requires the proceeds from sale of collection items to be used to acquire other items for collections.
The three functional classifications for expenses incurred by a non-profit organization are:
program services
management and general costs
fund-raising and other supporting services.
When common costs are incurred, they should be allocated to the appropriate classifications.
The three most generally used revenue classifications for a hospital are
patient services revenues, other operating revenues, and non-operating revenues.
Support is generally considered a component of
earnings under the broad heading of “Revenue, gains and other support”.
Not-for-profit reporting guidance included in FASB ASC 958 primarily focuses on
Basic information for the organization as a whole. The standards establish guidance for general-purpose external financial statements provided by a not-for-profit organization.
Quasi-endowment funds
Account for assets that have been internally designated by the institution for a specific purpose.
Unrestricted net assets.
Endowment funds
Outside donors have stipulated that the principal is to be maintained intact in perpetuity.
Permanently restricted net assets.
Term endowment funds
Outside donors have stipulated that the principal is to be maintained intact for a specified term or until the happening of some event.
Temporarily restricted net assets.
The restricted current fund
Current assets that are outside donor-restricted for a specific purpose.
Temporarily restricted net assets.
Volunteer donated service
The value of donated services should be recorded as both a contribution and an expense if the services performed are a normal part of the program or supporting services and would otherwise be performed by salaried personnel.
The services performed by the other volunteers for special events would not qualify since they are not a normal part of the program and would not otherwise be performed by salaried personnel.
In a not-for-profit organization, if the pledges are legally enforceable
they are recorded in the accounts
Marketable equity securities with readily determinable fair values and all investments in debt securities are measured at
fair value in the statement of financial position. Gains and losses on investments are reported in the statement of activities as increases or decreases in unrestricted net assets unless their use is temporarily or permanently restricted by explicit donor stipulations or law.
Marketable securities are recorded at
their fair value at the balance sheet date
Cash flows from Operating Activities in a nongovernmental not-for-profit organization include
applicable agency transactions, unrestricted cash contributions, program income, and interest income or dividend income from investments.
Both grants to other organizations and depreciation
are recorded as expenses in a not-for-profit organization.
How should a nongovernmental not-for-profit organization report depreciation expense in its statement of activities?
It should be included as a decrease in unrestricted net assets.
The statement of functional expenses is required for
voluntary health and welfare organizations but is optional for all others.
When a temporary restriction is satisfied, a reclassification is shown on the statement of activities by
decreasing temporarily restricted net assets and increasing unrestricted net assets.
Unconditional pledges that will be collected over more than one year
should be reported as pledges receivable, valued at their present value.
Cash contributions restricted by the donor for long-term purposes must be reported as
cash inflow in the financing activities section
Temporarily restricted net assets would increase
the amount of the investment earnings and
increase in the market value of the underlying permanently restricted investment.
Temporarily restricted net assets
are subject to donor imposed stipulations that either expire by passage of time or can be fulfilled and removed by actions of the organization.
Donor-imposed restrictions that are met in the same period they are received may be recorded a
unrestricted support (contribution revenue)
The museum would typically display proceeds from the sale of works of art or purchases of works of art
Investing activities.
The simultaneous receipt and use of utilities is a form of
contributed assets and not services. The foundation would recognize the fair value of the contributed electricity as both revenue and expense in the period it is received.
Donated items are valued at
fair value upon receipt
Securities are marked to market and valued at
fair value at the balance sheet date
statement of financial position
Assets, liabilities, and net assets.
