Not for Profit Accounting
Help Questions
CPA Financial Accounting and Reporting (FAR) › Not for Profit Accounting
A statement of financial position for a nongovernmental non for profit organization reports amounts for which of the following classes of net assets?
Conditionally restricted
Long term
Current
With donor restrictions
Explanation
In the statement of financial position for a non for profit organization, net assets are classified as with or without donor restrictions.
On December 1, Year 1, the Gregory Corporation makes a donation of \$100,000 to the Family Services Foundation, a private not-for-profit organization. Gregory requests that Family Services give the money to The Soup Kitchen, another not-for-profit organization, but allows Family Services to give the money to another organization if it seems more appropriate. On December 23, Year 1, Family Services gives the money to The Soup Kitchen. When will each organization recognize the gift as contributed support?
Family Services never recognizes contributed support, and The Soup Kitchen recognizes contributed support on December 1
Family Services recognizes contributed support on December 1, and The Soup Kitchen recognizes contributed support on December 23
Both entities recognize contributed support on December 1
Both entities recognize contributed support on December 23
Explanation
Family Services recognizes the gift as contribution revenue when the gift is received, because it has the option to choose which organization to give the money to. The Soup Kitchen will also recognize contribution revenue (from Family Services) when it receives its gift.
A statement of financial position for a nongovernmental non for profit organization reports amounts for which of the following classes of net assets?
Conditionally restricted
Long term
Current
With donor restrictions
Explanation
In the statement of financial position for a non for profit organization, net assets are classified as with or without donor restrictions.
Of the following, which would be included as a part of total net assets in the statement of financial position for a nongovernmental non for profit entity?
None of the answer choices are correct
Total current and reserved assets
Total net assets with and without donor restrictions
Committed and non committed assets
Explanation
Net assets for non for profit entities are classified as with and without donor restrictions.
The New York Museum of Art is a private, not-for-profit organization. It receives a gift of a painting worth \$1 million on the date of the gift, which qualifies as a work of art or historical treasure. How will this donation be recorded by the museum?
The art work is not recorded in the financial statements
The museum can report an asset of \$1 million or have no reporting at all
The museum must record an asset of \$1 million
The museum must record an increase in restricted net assets of \$1 million
Explanation
While ordinary donations are recorded as assets and revenue at fair value at the time of the donation, items that qualify as artworks or historical treasures are treated differently. The organization can choose to report them as they would any other asset, or not report them at all, since these assets typically don't provide future economic benefits.
The New York Museum of Art is a private, not-for-profit organization. It receives a gift of a painting worth \$1 million on the date of the gift, which qualifies as a work of art or historical treasure. How will this donation be recorded by the museum?
The art work is not recorded in the financial statements
The museum can report an asset of \$1 million or have no reporting at all
The museum must record an asset of \$1 million
The museum must record an increase in restricted net assets of \$1 million
Explanation
While ordinary donations are recorded as assets and revenue at fair value at the time of the donation, items that qualify as artworks or historical treasures are treated differently. The organization can choose to report them as they would any other asset, or not report them at all, since these assets typically don't provide future economic benefits.
Of the following, which would be included as a part of total net assets in the statement of financial position for a nongovernmental non for profit entity?
None of the answer choices are correct
Total current and reserved assets
Total net assets with and without donor restrictions
Committed and non committed assets
Explanation
Net assets for non for profit entities are classified as with and without donor restrictions.
On December 1, Year 1, the Gregory Corporation makes a donation of \$100,000 to the Family Services Foundation, a private not-for-profit organization. Gregory requests that Family Services give the money to The Soup Kitchen, another not-for-profit organization, but allows Family Services to give the money to another organization if it seems more appropriate. On December 23, Year 1, Family Services gives the money to The Soup Kitchen. When will each organization recognize the gift as contributed support?
Family Services never recognizes contributed support, and The Soup Kitchen recognizes contributed support on December 1
Family Services recognizes contributed support on December 1, and The Soup Kitchen recognizes contributed support on December 23
Both entities recognize contributed support on December 1
Both entities recognize contributed support on December 23
Explanation
Family Services recognizes the gift as contribution revenue when the gift is received, because it has the option to choose which organization to give the money to. The Soup Kitchen will also recognize contribution revenue (from Family Services) when it receives its gift.
A man donated securities with a cost of \$20,000 and a fair market value of \$50,000 to a local theatre. His tax deduction was limited to \$30,000. At what amount should the theatre record the securities at the date of donation?
\$50,000
\$0
\$20,000
\$35,000
Explanation
Donated securities are recorded at \$50,000 the fair value when received. Contributions are measured at their fair value at the time of the gif, the securities are measured at fair value.
The ABC museum, a not for profit organization, received a contribution of historical artifacts. It need not recognize the contribution if the artifacts are to be sold and the proceeds used to:
Acquire other items for collections
Repair existing collections
Support general museum activities
Purchase buildings to house collections
Explanation
An entity need not recognize contributions of works of art if the donated items are added to collections that are held for public exhibit, are protected, and are subject to organizational policies that require the proceeds of sale to be used to acquire other items for the collection.