FAR - F9: Governmental and Not-for-Profit Organizations

Question 1

Answer: What amount should Nox report as the change in net position for governmental activities?

Answer 1

Answer: The reconciliation of the change in fund balancee in governmental fund financial statements to the change in net position for governmental activities in the govenment-wide financials is computed using the GOES BARE.

G - Change in Governmental Fund Balance: $25,000
O - Other Financing Sources: 0
E- Expenditure Capital Outlay: 0
S - Inter Service Fun Net Income = $,000
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Change in Net Position in Government-wide financial statements; $34,000

Question 2

Question: Citizens of the city of Reformville can expect to find the following items in their basic financial statements reported in accordance with GASB #34.

Answer 2

Answer: Government-wide Financial statements, Fund Financial Statements, and Notes to the Financial Statements.

Question 3

Question: In applying the criteria used for determination of major funds required for reporting in a government’s fund financial statements, a government would consider which of the following statistics?

Answer 3

Answer:
Aggregate Revenue or Expenditures/Expenses - YES

Aggregate Assets or Liabilities - Yes

Aggregate Fund Balance/Equity - NO

**Rule: the criteria for determining major funds includes qualification as to revenue, expenditures/expenses, assets or liabilities that are at lease 10% of the associated total for ALL governmental OR enterprise AND at lease 5% of the total of the associated totals for ALL governmental AND enterprise funds.

Question 4

Question: What amount of change in temporarily restricted net assets should the organization report?

  unrestricted - Temp/Res - Per/res - total
 --------------------   ---------------   ------------  --------- Invest inc               30,000                  30,000 Release res 30,000  (30,000)                0 Expenses   (45,000)    0                      (45,000) -------------------------------------------------------------------------- Subtotal        (15,000)     0                   (15,000)

Investments
Losses (60,000) (60,000)
Beg./Year 500,000 500,000
————————————————————————–
End/Year (75,000) 0 500,000 425,000
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Answer 4

Answer: 0

Rule: Generally, losses on the investments of a donor-restricted endowment fund (permanently restricted net assets for external reporting purposes) serve to reduce temporarily restricted net assets to the extent that donor-imposed temporary restrictions on net appreciation (cumulative losses minus gains) of the fund have been met before the loss occurs.

**The change in temporarily restricted net assets is comprised of the increase in temporarily restricted net assets related to investment earnings and the amounts released from temporary restrictions.

Question 5

Question: Hann School, a nongovernmental not-for-profit organization, spent $1 million of temporarily restricted cash to acquire land and building.

How should this be reported in the statement of activities?

Answer 5

Answer: Increase in unrestricted net assets.

**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.

**Since the donor restricted contribution funds a capital asset, the increase in unrestricted net assets is not reduced by an expense.

Question 6

**Revenue and expense in the period received and used a fair value.

**This is never happen in Commercial accounting.

Answer 6

Rule: 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.

Question 7

**Multiyear pledges are recorded at their net present value at the date the pledge is made.

Answer 7

Thus, multiyear pledges should be discounted.