Chap010 - Chapter 10 - Accounting for Private...

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Unformatted text preview: Chapter 10 - Accounting for Private Not-for-Profit C HAPTER 10 Accounting for Private Not-for-Profit 10-1. A NSWERS WILL VARY DEPENDING ON STATEMENTS OBTAINED . 10-2. A. T HE FINANCIAL REPORTS REQUIRED BY THE FASB FOR NONPROFIT ORGANIZATIONS ARE (1) S TATEMENT O F F INANCIAL P OSITION , (2) S TATEMENT O F A CTIVITIES , AND (3) S TATEMENT O F C ASH F LOWS . I N ADDITION , VOLUNTARY HEALTH AND WELFARE ORGANIZATIONS ARE REQUIRED TO PREPARE A S TATEMENT O F F UNCTIONAL E XPENSES . B. T HE THREE CLASSES OF NET ASSETS , AS REQUIRED BY THE FASB, ARE (1) U NRESTRICTED , (2) T EMPORARILY R ESTRICTED , AND (3) P ERMANENTLY R ESTRICTED . C. P ROPERTY , PLANT , AND EQUIPMENT IS TO BE RECORDED , AS IS TRUE FOR BUSINESS ORGANIZATIONS , AS LONG- TERM ASSETS AND DEPRECIATED IN ACCORD WITH ESTIMATED LIVES ( OF COURSE , EXCEPT FOR LAND ). T HE FASB HAS GIVEN AN OPTION REGARDING THE ACQUISITION OF PROPERTY , PLANT , AND EQUIPMENT WITH EITHER UNRESTRICTED OR RESTRICTED RESOURCES . I N THE CASE OF PLANT ACQUIRED WITH UNRESTRICTED RESOURCES , (1) THE PLANT MAY BE RECORDED AS UNRESTRICTED INITIALLY AND DEPRECIATED OR (2) THE PLANT MAY BE RECORDED INITIALLY AS TEMPORARILY RESTRICTED AND RECLASSIFIED IN ACCORD WITH THE DEPRECIATION SCHEDULE . I N THE CASE OF PLANT ACQUIRED WITH TEMPORARILY RESTRICTED RESOURCES , (1) THE PLANT MAY BE INITIALLY RECORDED AS UNRESTRICTED AND A RECLASSIFICATION SHOWN IMMEDIATELY IN THE TOTAL AMOUNT OR (2) THE PLANT MAY BE INITIALLY RECORDED AS TEMPORARILY RESTRICTED AND RECLASSIFIED IN ACCORD WITH THE DEPRECIATION SCHEDULE . D. FASB S TATEMENT 124 REQUIRES INVESTMENTS IN DEBT SECURITIES AND INVESTMENTS IN EQUITY SECURITIES WITH DETERMINABLE FAIR VALUES ( EXCEPT INVESTMENTS REQUIRED TO BE CONSOLIDATED OR TO USE THE EQUITY METHOD ) TO BE REPORTED AT FAIR VALUE . U NREALIZED GAINS AND LOSSES ARE TO BE REPORTED ALONG WITH REALIZED GAINS AND LOSSES AS ADDITIONS TO OR DEDUCTIONS FROM THE APPROPRIATE NET ASSET CLASS IN THE S TATEMENT OF A CTIVITIES . S UCH GAINS OR LOSSES ARE CONSIDERED UNRESTRICTED UNLESS RESTRICTED BY THE DONOR OR LEGAL REQUIREMENTS . O THER INVESTMENTS (R EAL E STATE , ETC .) WILL CONTINUE TO BE REPORTED AS UNDER PRIOR AUDIT GUIDES . G ENERALLY , THIS MEANS A NOT- FOR- PROFIT HAS A CHOICE BETWEEN COST , LOWER- OF- COST- OR- MARKET , OR FAIR VALUE . 10-1 Chapter 10 - Accounting for Private Not-for-Profit 10-3. A. R ESOURCES THAT HAVE BEEN RESTRICTED BY THE DONOR FOR EXPENDITURE IN FUTURE PERIODS WOULD BE RECOGNIZED AS CONTRIBUTION REVENUE , INCREASING TEMPORARILY RESTRICTED NET ASSETS , IN THE YEAR IN WHICH THE PLEDGE OR CASH IS RECEIVED , WHICHEVER COMES EARLIER . W HEN THE TIME PERIOD ARRIVES , THE RESOURCES WOULD BE RECLASSIFIED TO THE UNRESTRICTED CLASS OF NET ASSETS ....
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Chap010 - Chapter 10 - Accounting for Private...

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