FAR - NFP - Special Issues

Question 1

Endowments

Answer 1

1) Regular Endowments

2) Other Endowments:
- Quasi
- Term
- Board Designated

Question 2

Regular (Pure) Endowments

Answer 2

• external party donates w/stipulation must remain intact forever “perm restricted n/a” (cannot be spent)

Endowment Earnings:

• restricted - (temp rest. n/a)
• no restriction - (unrest. n/a)

Question 3

Term Endowments

Answer 3

• principal donated by external party to be invested and then spent after time passed = “temp restricted n/a”

Question 4

Quasi Endowment

Answer 4

• principal set aside by governing body rather than external party.
• accounted for as “unrestricted”

Question 5

Board Designated Endowment

Answer 5

• governing body set aside funds to spend for specific purpose
• accounted for as “unrestricted” shown as a “reserve in unrestricted”

Question 6

Split Interest Agreement

Answer 6

1) NPO may share benefits in a trust with donor or 3rd party beneficiaries

2) Characteristics:
- revocable OR irrevocable
- time period
- distributions
- lead interest (NPO receives dist. during agreement term)
- remainder interest (dist. only @ end of agreement)

Question 7

Split Interest Agreement Recognition/Measurement

Irrevocable

Answer 7

• record asset @ FV
• Liab for annuity portion due to donor or 3rd parties
• contribution revenue for NPO’s portion

Question 8

Split Interest Agreement Recognition/Measurement

Revocable

Answer 8

• similar to pledge
• record assets @ FV AND a refundable advance
• contribution revenue = recognized when trust = irrevocable OR funds dist. to NPO @ end of agreement

Question 9

Investments

Answer 9

NPOs account for ALL investments @ FV

• gains/losses reported as changes to unrestricted N/A unless there is a donor imposed restriction
• NPOs don’t use trading, avail-for-sale, and HTM classifications of investments

Question 10

NPO Fund Acct

Answer 10

• NPOs rarely use budgetary OR encumbrance acct (common with gov’t acct)
• Fund acct is allowed, but since external reporting is aggregated (entity-wide), fund acct has a secondary role

Question 11

Funds used by VHWO

Answer 11

Fund Types:

1) unrestricted current fund
2) restricted current fund
3) custodian fund
4) endowment fund
5) loan/annuity fund
6) land, building, equip. fund

*Fund acct = not required for financial reporting