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Chapter016 - CHAPTER 16 ACCOUNTING FOR COLLEGES AND...

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CHAPTER 16: ACCOUNTING FOR COLLEGES AND UNIVERSITIES OUTLINE Number Topic Type/Task Status (re: 13/e) Questions: 16-1 Authoritative standards Distinguish Same 16-2 Restricted gifts and grants Contrast Same 16-3 Net asset categories Distinguish New 16-4 Endowments and split-interest agreements Contrast New 16-5 Accounting for endowments Explain Same 16-6 Contributions Explain 16-7 16-7 Collections Explain 16-8 16-8 Public vs. private financial statements List 16-9 16-9 Segments Explain New 16-10 Performance measures Describe Same Cases: 16-1 Component units Evaluate Revised 16-2 Comparison of public vs. private universities Analyze Same 16-3 Charts of accounts and enterprise systems Internet Same Exercises/Problems: 16-1 Various Multiple choice Revised 16-2 Private university transactions JEs and FS New 16-3 Public university transactions JEs and FS Same 16-4 Private university trial balance to FS Financial statements New 16-5 Institutionally related foundations Explain 16-6 16-6 Public university trial balance to FS Financial statements 16-7 16-1
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CHAPTER 16: ACCOUNTING FOR COLLEGES AND UNIVERSITIES Answers to Questions 16.1. Governmentally owned (public) colleges and universities are under the standards-setting jurisdiction of the GASB. GASBS 35 , issued in November 1999, amends GASBS 34 to extend its application to public colleges and universities. The financial reporting model for a public college depends on whether it is engaged in only business-type activities, only governmental-type activities, or both. Nongovernmentally owned (private) colleges and universities are under the jurisdiction of the FASB and follow SFAS Nos. 116 and 117 , as described in Chapter 14. Public colleges or universities engaged only in business-type activities will report in a manner that is now quite similar to a private college or university following FASB standards. Compare Illustrations 16-1 through 16- 3 to Illustrations 16-4 through 16-6. 16.2. Net assets that are subject to limitations placed on them by persons or organizations outside the institution in nonexchange transactions are called restricted . Typically net assets of a college or university are restricted for research, scholarships and fellowships, loans, department uses, debt service, or acquisition of capital assets. In public colleges and universities restricted net assets are further distinguished by whether the restriction makes the net assets nonexpendable or expendable. GASBS 33 provides additional guidance in accounting for nonexchange transactions. Under the FASB standards employed by private colleges and universities, restricted gifts are recorded as support in the period in which the gift is made, and then classified as to whether the contribution increases temporarily or permanently restricted net assets. As expenditures are made for the purpose or time period stipulated by the donor, then net assets are “released from restrictions” and treated as an addition to unrestricted net assets of the current period.
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