{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Ch19 - CHAPTER 19 UNDERSTANDING THE ISSUES 1 The...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 19 UNDERSTANDING THE ISSUES 1. The measurement focus used by public uni- versities under GASB Statement No. 34 is both the flows of financial resources and the flows of eco- nomic resources. Private universities use a meas- urement focus of economic resources. Both entities use full accounting and must focus on the recovery of costs. However, a public university also must ad- here to the governmental reporting model and yearly funding and budgetary issues of governments. Therefore, they have unique needs for a financial re- sources (working capital) focus. 2. Accounting for contributions for a private uni- versity requires recognizing revenue in the period the unconditional contribution (or promise to give) is received. If a donor-imposed restriction as to use or time period is present, the contribution is recognized as temporarily restricted revenue in the period re- ceived. When donor-imposed restrictions are satis- fied, the restriction is released. In a public university, contributions of cash or investments to the unrestric- ted current fund may be recorded as revenue in the period received unless the contribution is designated for future periods. Contributions designated for fu- ture periods are recognized as deferred revenue. 3. In order for the government grant to be a contri- bution, the grantor may not receive anything of value from the use of the funds by the receiving organiza- tion. If something of value is given in return for the grant, the grant is an exchange transaction that will recognize an equal amount of earned revenue when expenses are made in accordance with the provi- sions of the grant. This distinction is important in private universities since under FASB 116 only a contribution can be restricted. It is less important in public universities where both contributions and grants are considered restricted revenues. 4. Most governmental colleges or universities will be required to report both funds-based information in their financial statements as well as entity-wide con- solidated information. Therefore, fund information will continue to be important. Government and other grantors may also want to see resources accounted for separately from unrestricted resources. 5. Private colleges or universities may also report both funds-based information in their financial state- ments to provide more information to governments, donors, and grantors who are interested in the prop- er recording of restricted resources. 6. Assets limited as to use are not restricted, merely board (or internally) designated. Only a donor can impose a restriction per FASB Statement No. 116. 7. A hospital will bill out to all types of patients (with and without insurance and with different types of insurance coverage) the same amount. This ad- herence to gross revenue determination is designed to get the maximum revenue to cover costs. Adjust- ments are then determined in the contractual negoti- ations with HMOs and other insurance providers.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern