Not For Profit Accounting Flashcards

1
Q

What three conditions are required in order for donated service to be recognized as contribution:

A
  1. The donated service requires specialized skill
  2. The person donating the service posses the specialized skill,
  3. If the service was not donated it had to be bought
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2
Q

How is depreciation treated in the NFP organizations?

A

Depreciation is recorded as a decrease in the unrestricted assets.

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3
Q

How are pledges (unconditional promise to give) recognized?

A

On accrual basis net of uncollectibles.

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4
Q

What is variance power?

A

It applies to VHWO when acting as an intermediary for the donation received:

If they unilateral power to redirect the donation received to someone other than the party specified as beneficiary they have variance power.
Donation will be recognized as revenue.

Else it will be considered a liability,

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5
Q

When can an NPO capitalize work of arts received as donation?

A

3 Rules:

  1. Work used for exhibition, educational and/or research purposes
  2. It is preserved and protected
  3. If sold proceeds used to buy similar art work for collection
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6
Q

How is depreciation expense treated in the statement of activities of a NPO?

A

It is deducted from unrestricted net assets.

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7
Q

What is the JE for donation of medicine received by a Governmental hospital?

A

This donation is part of other revenue:

JE is:
Inventory of medicine Dr
Donated Revenue Cr

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8
Q

How is tuition revenue reported by a university?

A

Net of Scholarship Allowance and Uncollectible amount.

Scholarship may included funds from”

  1. University’s general fund
  2. External donations
  3. Pell grant
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9
Q

What is reported under Total Revenue, gains and other support on the statement of operations?

A

It includes operating revenue included under unrestricted net assets under statement of activities.

They include:
Net Patients Service Revenue net of charity revenue
Other revenue
the portion of Temporary Restricted Net Assets used for operations.
Net of Bad Debt expense

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10
Q

How are donated securities recorded?

A

They are initially recorded at their FV on date of donation.

Then on the FV on the reporting date.

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11
Q

How is depreciation expense treated by Non-govt NPO?

A

It is included as a decrease in the unrestricted net assets

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