Chapter 11 - Solution Manual

Recipients may differ significantly in continuity

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recipients may differ significantly in continuity, stability, and risk from cash collections of pledges made to a special-purpose fundraising campaign. Classifying and reporting those receivables and collections of receivables as separate groups of assets and of cash inflows facilitates financial statement analysis aimed at objectives such as predicting amounts, timing, and uncertainty of future cash flows. 958-210-45-6 Assets may be restricted by donors. For example, land could be restricted to use as a public park. Generally, however, restrictions apply to net assets, not to specific assets. Assets need not be disaggregated on the basis of the presence of donor-imposed restrictions on their use; for example, cash available for unrestricted current use need not be reported separately from cash received with donor- imposed restrictions that is also available for current use. However, cash or other assets received with a donor-imposed restriction that limits their use to long-term purposes shall not be classified with cash or other assets that are unrestricted and available for current use. The kind of asset whose use is limited shall be described in the notes to the financial statements if its nature is not clear from the description on the face of the statement of financial position. FASB ASC 11-2 Indirect Guarantees
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228 Guidelines for accounting for indirect guarantees are found at FASB ASC 460-10-50. It can be accessed by searching “contingencies and indirect guarantees.” The students’ answers should be based on the following: 460 Guarantees 10 Overall 50 Disclosure General > Information About Each Guarantee or Group of Similar Guarantees > > Loss Contingencies 460-10-50-1 The following requirement applies to all guarantees, including guarantees that are outside the scope of paragraph 460-10-15-4; however, it does not apply to guarantees described in paragraph 460-10-15-7(a). 460-10-50-2 An entity shall disclose certain loss contingencies even though the possibility of loss may be remote. The common characteristic of those contingencies is a guarantee that provides a right to proceed against an outside party in the event that the guarantor is called on to satisfy the guarantee. Examples include the following: a. Guarantees of indebtedness of others, including indirect guarantees of indebtedness of others b. Obligations of commercial banks under standby letters of credit c. Guarantees to repurchase receivables (or, in some cases, to repurchase the related property) that have been sold or otherwise assigned d. Other agreements that in substance have the same guarantee characteristic. 460-10-50-3 The disclosure shall include the nature and amount of the guarantee. Consideration should be given to disclosing, if estimable, the value of any recovery that could be expected to result, such as from the guarantor's right to proceed against an outside party.
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