CH 16 Sol - partial see docx

CH 16 Sol - partial see docx - CHAPTER 16: ACCOUNTING FOR...

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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. 16-3. The FASB requires that private colleges and universities identify donor/contributor restrictions on net assets as temporarily restricted or permanently restricted. The GASB does not utilize the same net asset categories; however, it does provide that within the restricted category of net assets, public colleges and universities should identify net assets as nonexpendable or expendable. Nonexpendable net assets are those net assets required to be maintained in perpetuity, thus, are similar to the permanently restricted net asset category used by private colleges. The expendable net assets include those net assets restricted by external donors/contributors as to time or purpose (similar to temporarily restricted net assets). In addition, and unlike temporarily restricted net assets of private colleges and universities, expendable net assets include net assets restricted by creditors, law or regulation. 16-6. Disagree. SFAS No. 116 provides that conditional promises to give depend on the occurrence of a specified future and uncertain event to bind the promissor, and shall not be recognized until the conditions on which they depend are substantially met. Contributions received and unconditional promises to give must be recognized in the period received and reported as revenue that increases either unrestricted, temporarily restricted, or permanently restricted net assets. Although conditional promises to give are not recognized in the accounts, they should be adequately disclosed in the notes to the financial statements. 16-8. Private colleges and universities are required to present a statement of financial position (i.e., balance sheet), a statement of activities, and a statement of cash flows. FASB allows considerable discretion in presenting these statements. GASBS 35
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This note was uploaded on 04/12/2011 for the course ACCT 2500 taught by Professor Johnmalone during the Fall '08 term at Cuyahoga CC.

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CH 16 Sol - partial see docx - CHAPTER 16: ACCOUNTING FOR...

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