M5 -Not-For-Profit Revenue Recognition Flashcards
True or false: Generally, the difference between the FV of purchases and the amount transferred is classified as a contribution.
True
Contributions to a not-for-profit include transactions that are unconditional (not requiring a future event to occur), nonreciprocal, voluntary, and not of an ownership investment. (true or false)
true
Cash contributions and unconditional pledges are recognized as contribution revenue in the year in which the cash or pledge is received. (true or false)
true
Donated services are recognized if the services received either (1) create or enhance nonfinancial assets, or (2) require specialized skills; are provided by individuals possessing those skills; and would typically need to be purchases if not provided by donation. (true or false)
True
Contributions of services that do not enhance non-financial assets are recognized only SOME of the time:
S Specialized skills are required and possessed by donor.
O Otherwise needed by the organization
M Measurable
E Easily (at fair value)
Ex: damaged roof, roofer fixes roof at no charge. The roofer’s specialized skills were needed to repair the roof that would have been repaired otherwise.
The following entry would be made to record the minor repairs to the damaged roof:
DR: Expense (or asset)
CR: Contributions-without donor restrictions
An entity need not recognize contributions of works of art, historical treasures, and similar assets if the donated items are added to collections that 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 most generally used revenue classifications for a hospital are patient service revenues, other operating revenues, and nonoperating revenues. (true or false)
true
Other operating revenues are those generated by operations other than patient services. Revenues from educational programs would be classified as other operating revenues.
Nonoperating revenues represent incidental earnings not related to the ongoing and central operations of the hospital. Gifts without donor restrictions would be classified as nonoperating revenues.
Cafeteria revenue of a hospital is classified as other revenues. (true or false)
true
Good faith deposits associated with conditional promises would be recorded as a liability title “refundable advance” (true or false)
True
Unconditional pledges that will be collected over more than one year should be reported as pledge receivable, valued at their present value. (true or false)
True
Only UNconditional pledges and receipts are recognized as revenue. Conditional pledges would be recognized as a receivable and revenue ONLY when they become UNCONDITIONAL, namely when the pledge conditions (contingencies) are met (resolved). (true or false)
True
A conditional pledge, however, would not be recognized as receivable and revenue while identified as “conditional”.
Donated property is recorded at its FMV and is recognized as support. (true or false)
True