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Accounting Class 5

MNA Managerial Accounting Class 5 nonprofit revenue reporting

5 Types of Contributions Cash, Pledges, Services, In-Kind, Other Inflows
Cash Contribution Monetary donations
Pledge Contributions Promises to make monetary or non-monetary donations
Services Services provided to organizations
In-Kind Contributions Non-monetary assets used by organizations
Other In-Flow Contributions Other inflows, such as investment income
Reporting Agency Transactions Organization acts as an agent or trustee for the donor
Reporting Exchange Transcations An exchange transaction where both parties receive something of value
Define "Reporting" How to identify, measure, and report inflows related to each category of resources
Define "Contribution" according to FASB An unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary nonreciprocal transer for another entity acting other than as an owner. Other assets include securities, land, buildings, us
Conditional Contributions A contribution conditional on a future event the occurrence or non-occurrence of which releases the donor's obligation
Restricted Contribution A contribution restricted for a specific purpose or time period.
Reporting Unconditional, Restricted, Expressed Cash Contributions Donor expressly states a restriction. If donor-imposed restriction is met in the same time-period, the org may adopt a policy to report such contributions as unrestricted, but must disclose in financial statement notes
Reporting Unconditional, Restricted, Implied Cash contribution Contributions received in response to a specific appeal, such as to build a new building/Property, plant or equipment: Board may decide whether to imply a time restriction based on useful life or treat as unrestricted
Reporting Conditional Cash contributions Recognize the contribution when the donor-imposed condition is substantially met/Until then, account for as a "refundable advance."
Define Pledge A written or oral agreement to contribute cash or other assets to another entity. A promise to give may be either conditional or unconditional.
Reporting Unconditional Pledge Reported as receivables and contribution revenue in the period the unconditional promise is made
Requirements for reporting Unconditional Pledge Sufficient verifiable evidence of pledge; increase temporarily restrict net assets, if due in future period; reported at fair value
More on Fair Value Net realizable value if due within one year: The amount the org expects to collect, based on (1) past collection experience; (2) creditworthiness of parties; (3) organizations' efforts to enforce pledges; Recorded at present value if due beyond one year
Reporting of Pledge Disclosures Contributions receivable pledged as collateral or otherwise limited as to use; amt of pledges due in less than one year, 1-5 years, and in more than 5 years; allowance for uncollectible pledges arising from changes in estimates
Reporting of Conditional Pledges If likelihood that condition will not be met is remote: report as unconditional/otherwise, do not report
What to Disclose with Pledges Total amts promised and description of conditions; total amts for each category of condition; promise made in a valid wills, known and unknown
When to report Services If services created or enhanced a nonfinancial asset, such as a building or; services required specialized skills, provided by individuals w/ those skills, and would have been purchased if not contributed
How to report Services Fair value
Disclosures for reporting Services (Guide 5-79) Nature and extent of contributed services received by org; description of the programs or activities for which the services were used; amt of contributed services recognized during the period; NFP orgs are encouraged to report in the notes
When to Report In-Kind Donations Can be used internally or sold
How to Report In-Kind Donations at Fair Value
What are Special Issues w/ In-Kind Donations (3) Items donated for fundraising, facilities, significance
Reporting Items Donated for fundraising Report @ fair value when received and adjust based on auction price
Issues w/ In-Kind Facilities Report contributions as revenue and expense in period asset used. If unconditional promise to give for a specified number of periods, then report as contributions receivable and increase in temporarily restricted net assets.
Significance of Reporting In-Kind Donations Under-reporting leaves others unaware of dependence on volunteers.
Define Agency Transaction (Guide 5.05) Part 1 of 4 Some NFP orgs act as agents, trustees, or intermediaries, helping donors to make a contribution to another entity or individual.
Define Agency Transaction (Guide 5.05) Part 2 of 4 When acting in that capacity, those NFP orgs do not receive a contribution when they disburse the assets to the other entituty or individual.
Define Agency Transaction (Guide 5.05) Part 3 of 4 Instead, they act as go-betweens, passing the assets from the donor through their org to the specified entity or individual.
Define Agency Transaction (Guide 5.05) Part 4 of 4 Federated fund-raising orgs, community foundations, and institutionally related orgs are examples of NFP orgs that commonly serve as agents, trustees, or intermediaries, but any org can function in those capacities.
General Rules for Agency Transactions Report an increase to assets and liabilities when asset received; and a reduction to assets and liabilities when transferred to beneficiary
Define Exchange Transactions A transatciton in which each part receives something of value, as part of the organizations' central activities (revenue) or peripheral activities (gain).
Rules for Revenue in Exchange Transactions Recognized based on accrual accting principles; measured by cash or receivables, with receivables valued @ net realizable value (net allowance for uncollectible revenues); increase in unrestricted net assets in a statement of activities; report gross of
Special Issues w/ Exchange Transactions Token gift - not an exchange transaction; combined transaction - report as part contribution and part exchange; dues - report over the period to which the dues relate
Created by: MNA
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