M6 - Not-For-Profit Transfers of Assets and Other Accounting Issues

Question 1

Not-for-profit organizations are considered financially interrelated organizations in the event that one of the organizations is what?

Answer 1

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.

Question 2

If a contribution received is subject to a specific donor-imposed restriction and the not-for-profit entity has no variance power, the receipt is accounted for as a what?

Answer 2

A liability.

Not a contributions on the statement of activities

Question 3

Beneficiaries with a financial interest in recipient organizations recognize the change in their interest of the recipient organization on their statement of activities. (true or false)

Answer 3

True

The interest in the net assets of the recipient is adjusted for the beneficiary’s share of the change with the following entry:

DR: Interest in Net Assets
CR: Interest in Marble Foundation net assets (statement of activities)

Question 4

In the balance sheet of a Not-For-Profit hospital, marketable equity securities should be reported at:

Answer 4

Fair Value with gains and losses reported in the statement of activities

Question 5

All debt securities and those equity securities that have readily determinable fair values are measured at fair value in the statement of financial position. (true or false)

Answer 5

True

Gains and losses on investments are reported in the statement of activities. Investment income (e.g., dividends and interest) is reported in the period earned as an increase in net assets.