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My CPA-FARmodule22

Notecards I made from Wiley's 2012 CPA Exam Review

What are the three categories net assets are divided into for not for profit accounting? Unrestricted, temporarily restricted, and permanently restricted
What is included in permanently restricted assets? assets that must be maintained or used in a certain way, endowments that must be invested permanently with income either restricted or unrestricted, land if must be held in perpetuity
What is included in temporarily restricted assets? unexpended resources to be used for a particular purpose at a time in the future, or invested for a period of time. Also may be used for the non depreciated amount of a plant gift (depreciated amt is deduction from unrestricted net assets)
What is included in unrestricted resource assets? all other resources, including unrestricted contributions, net amount from providing services,unrestricted income from investments
What statements are required in not for profit accounting? And what goes on each statement? Statement of financial position(report assets,liabilities,and net assets), Statement of activities(report revenues,expenses,gains, losses,and reclassification of net assets), Statement of cash flows(
If a donor imposes a condition on a unconditional contribution, when is the receivable or revenue recognized? Not until it is reasonably certain the not for profit will meet the condition
What are multiyear contributions receivable recorded at? PV of the future collections. Future year collections are presumed to be temporarily restricted revenues and reclassified in year received. Diff between PV recorded amount and FV at contribution date is recorded as contribution revenue
When is an increase in net assets considered a contribution (not exchange revenue)? if nothing is given by the not for profit organization in exchange in a transaction, it is a contribution
What would the not for profit organization do if they were an intermediary or agent for the transfer of assets to another not for profit? any exceptions to this? 1.Not recognize a contribution 2.granted variance power to redirect resources or financially interrelated (recognize contribution offset by recognition of liability to recipient)
Where are expenses reported for a not for profit? all expenses are reported as decreases in unrestricted net assets
What is thought of as a collection? and when may an entity capitalize it? 1.works of art/historical treasures and similar 2.meet all of the following a.held public exhibition,eduction,or research for public gain b.protected/preserved c.subject to a policy that requires proceeds from sale used to acquire other collection ite
If collections are not capitalized, what when collections are donated? revenues or contributions would not be recognized
Unlike accounting for business enterprises, what is to be done with investments in debt/equity securities that have determinable FV's? Recognize all unrealized gains/losses on statement of activities, along with realized gains/losses in appropriate net asset class - Side note, report these at FV on statement of net assets
When should contributed services be recognized? (meet any one of the requirements) Services create or enhance nonfinancial assets, require specialized skills provided by someone with these skills and would typically be purchased if not for the donation of a kind soul
What is the general rule in a split-interest agreement with a donor for the recognition of revenues by a not for profit? record revenues in an amount equal to the PV of anticipated receipts
What are the three criteria for determining an activity involving fund-raising and either program or management and general activities is not fund-raising as normally is presumed? 1.Purpose- activity has more than one purpose (look at what fees for activity is based on) 2.Audience-cant select based on likelihood of contribution 3.Content-must include a call to action other than raising money
What additional financial statements are required by voluntary health and welfare organizations (i.e. red cross)? Statement of functional expenses
What are the categories of the statement of financial position? How are net assets broken down? 1.Total Assets, Total Liabilities, Net Assets 2. Unrestricted, temporarily restricted, permanently restricted
What are the FASB requirements for expense reporting? 1.expenses must be reported by function in notes or statement of activities 2.fund raising expenses must be disclosed in notes or statement of activities
On the CPA exam, if the question states that the not for profit organization implies no restriction on the acquisition of fixed assets, what does this mean in regards to plant acquisition restrictions? Record expense and depreciation as always would D:Program expense that used it C:accumulated depreciation
How are student tuition and fees reported in regards to scholarships and fellowships provided without compensation? Net as a debit to revenue deduction-student scholarships
How are student tuition and fees revenue affected by graduate assistantship and other amounts given as tuition remissions? School is compensated for these scholarships, so record them as an expense
What requirement is there to determine if a health care organization is considered voluntary health and welfare organization? where is the payment coming from. If from primarily voluntary contributions then considered voluntary. If from recipient of service, third party payer, or govt program then its a health care organization
What financial statements are required from a health care organization? balance sheet, statement of operations, statement of changes in net assets, a cash flow statement, and notes
In a health care organization, what must be reported on the statement of operations below the performance indicator (operating income, revenues over expenses)? equity transfers from other entities tied to the reporting entity, receipt of restricted contributions, long lived asset contributions, unrealized gains/losses on investments, investment returns restricted by donor/law
What is done with charity care for a health care organization? mgmts policy for providing charity care and level of charity care provided are disclosed in the notes
In a health care organization, what is included in other revenues gains and losses? investment income, fees from education programs, proceeds from sale of cafeteria, proceeds from gift shot/parking lot/etc
In a health care organization, what do expenses decrease? What classification should expenses be reported as? 1. unrestricted net assets 2. either natural or functional classification
If a governmental health care organization chooses to report itself as a business type activity, what statements are required? Same as a proprietary fund. Balance sheet, statement of revenues,expenses, and changes in net assets, statement of cash flows
Created by: Bsantoro