Not-for-Profit Organizations

Question 1

What are revenue and other support resource inflows?

Answer 1

1) Revenues are exchange transactions in which not-for-profit earns resources in exchange for service performed ( art exhibition)
2) Other support represents operating income that is donated.

Question 2

How and when do you recognize cash contributions, unconditional promises, and conditional promises?

Answer 2

Cash Contributions - Received = Revenue

Unconditional promises (Pledge) (Written or Verbal Promise) - Recognized when pledged

Conditional Promises - (Pledged but depends on future occurrence) - Revenue when earned.

Question 3

How are multi-year pledges recorded?

Answer 3

PV Pledge =

1) Now = Revenue
2) Future = Temporarily restricted

Question 4

What and how are split-interest agreements recorded?

Answer 4

Split-interest agreements are shared with other beneficiaries:

1) They are measured at their fair values at the date of acquisition
2) Displayed as temporarily restricted

Question 5

How are donated services recorded?

Answer 5

Recorded at FV

• Donated services should be recorded as contribution revenue if:
  1) They created or enhance a non financial asset (land, building, inventory)
  2) They provide specialized skills that the provider possess and would otherwise have purchased (doctor, attorney, accountant)

Contribution are recognized “SOME” of the time:

Specialized skills are required and possessed by the donor
Otherwise needed by the organization
Measurable
Easily (at FV)

Question 6

What conditions need to be met for donated collection items to not be recorded? *Same as GOVT

Answer 6

ALL NEED TO BE MET:

1) The item is part of a collection held for public viewing
2) The collection is cared for
3) The organization requires any proceeds from the sales to be reinvested in other collection items

Question 7

How to record unrestricted contributions and J/E?

Answer 7

• Unconditional promises to contribute in the future are reported as restricted support (implied time restriction)
  1) Journal entry to record unrestricted pledges (with implied time restriction

Dr: Pledge receivable - temporarily restricted
Cr: Allowance for doubtful accounts
Cr: Contributed revenues - temporarily restricted

2) Journal entry to record collection

Dr: Cash - temporarily restricted
Cr: Pledge receivable - temporarily restricted

Dr: Satisfaction of time restriction - temporarily restricted
Cr: Cash - temporarily restricted

3) To record when restriction is released

Dr: Cash - unrestricted
Cr: Satisfaction of time restriction - temporarily restricted