Chapter 19 – NOT-FOR-PROFIT ENTITIES
19-8
DESCRIPTIONS OF CASES, EXERCISES, AND PROBLEMS
C19-1
LO 19-3,
LO 19-4,
LO 19-5
40 min.
M
Accounting for Donations
Students must specify the criteria for recognizing the value of donated services
for hospitals, VHWOs, and ONPOs. In addition, the students must discuss
donations of capital assets to hospitals, and accounting for cash contributions to
hospitals, VHWOs, and ONPOs.
C19-2
LO 19-5
20 min.
E
Public Support to an Other Not-for-Profit Organization
Students must analyze a contribution to an ONPO which has both a restricted
portion and an unrestricted portion.
C19-3
LO 19-4
30 min.
M
A Brief Analysis of the Financial Disclosures of United Way of America
Students should access the Web site for United Way of America and locate the
most recent Consolidated Financial Statements and Supplemental Schedule and
the Form 990. Students are then required to prepare a two- to three-page memo
presenting a summary of specific consolidated amounts for the most recent year.
C19-4
LO 19-5
45 min.
M
Conditional Gift to a Not-for-Profit Organization
Students are required to review the most current accounting standards governing
conditional gifts to not-for-profit organizations. They then must apply the
standard to a specific situation outlined in the problem and report their findings
and recommendations in a memorandum that includes authoritative citations.
C19-5
LO 19-4
45 min.
M
Accounting for Contributions to and Activities of a Not-for-Profit
Organization
Students are required to review the current accounting standards regarding
conditional gifts to not-for-profit organizations. They then must apply the
standard to a specific situation outlined in the problem and report their findings
and recommendations in a memorandum that includes authoritative citations.
C19-6
LO 19-4
45 min.
M
An Analysis of the Financial Statements for the American Red Cross, a
Voluntary Health and Welfare Organization
This case requires the student to obtain the most recent annual report of the
American Red Cross and answer a series of questions.
C19-7
LO 19-1
45 min.
M
An Analysis of the Financial Statements of the University of Notre Dame, a
Private University
This case requires the student to obtain the most recent annual report of the
University of Notre Dame and answer a series of questions.
Chapter 19 – NOT-FOR-PROFIT ENTITIES
19-9
C19-8
LO 19-4
45 min.
M
A
Profiles of Large Charitable Organizations
Students are required to access the www.bbb.org/us/charity/ Web site and
provide answers for questions concerning the Standards for Charity
Accountability. They should also select another charity and provide an overview
of the types of information provided, including its governance and fund-raising.
E19-1
LO 19-2
20 min.
E
Multiple-Choice Items on Colleges and Universities [AICPA Adapted]
Six multiple-choice questions dealing with transactions involving revenues and
unrestricted assets must be answered.
E19-2
LO 19-3
35 min.
E
Multiple-Choice Items on Hospital Accounting [AICPA Adapted]
Twelve multiple-choice questions requiring determination of journal entry
amounts and accounts for various hospital transactions.
E19-3
LO 19-3
25 min.
E
Entries for a Hospital’s Unrestricted (General) Fund
A series of transactions and events are provided for which students must prepare
journal entries. Included are a transfer from the restricted to the unrestricted fund
and an increase in the fair value of the trading securities portfolio.
E19-4
LO 19-3
30 min.
M
Entries for Other Hospital Funds
Students are required to prepare journal entries in the specific-purpose fund, the
plant fund, and the endowment fund for typical transactions.
E19-5
LO 19-4
25 min.
E
Multiple-Choice Questions on Voluntary Health and Welfare Organization
Accounting [AICPA Adapted]
Nine multiple-choice questions on basic accounting and financial reporting
issues of VHWOs.
E19-6
LO 19-4
35 min.
M
Entries for Voluntary Health and Welfare Organizations
Students are required to prepare entries for a VHWO and then prepare a
statement of activities for the year.
E19-7
LO 19-4
20 min.
E
Determination of Contribution Revenue
Students must prepare journal entries to account for donations and pledges to a
VHWO.
E19-8 LO
19-5
30 min.
M
Multiple-Choice Items on Other Not-for-Profit Organizations [AICPA
Adapted]
Ten multiple-choice questions on subjects such as the amount of revenue to be
recognized for a transaction in an ONPO, to the disclosures of the amounts of
expenses to be reported on the statement of activities.
Chapter 19 – NOT-FOR-PROFIT ENTITIES
19–10
E19-9
LO 19-5
25 min.
E
Statement of Activities for an Other Not-for-Profit Organization
A trial balance of the accounts in the unrestricted operating fund of an ONPO is
presented. Students must prepare a statement of activities.
P19-10
LO 19-2
40 min.
M
Financial Statements for a Private, Not-for-Profit College
Eleven transactions are given for a college that prepares financial statements in
conformity with ASC 958. Students must prepare a comparative balance sheet
and a statement of activities for a college.
P19-11
LO 19-3
30 min.
M
Balance Sheet for a Hospital
A series of transactions for a hospital are presented which students must analyze
and then prepare a balance sheet.
P19-12
LO 19-5
40 min.
M
Entries and Statement of Activities for an Other Not-for-Profit
Organization [AICPA Adapted]
The problem begins with the trial balance of the accounts at the beginning of the
year. Additional information is presented on transactions during the year.
Students must prepare the journal entries for the transactions and adjustments
and prepare the appropriate all-inclusive statement of activities for the year.
P19-13
LO 19-3
75 min.
H
Entries and Statements for General Fund of a Hospital
This problem presents the beginning of period trial balance and transactions
during the year affecting the general fund. Students must journalize the
transactions, and prepare comparative balance sheets for the general fund for
both years. They should also prepare a statement of operations for the
unrestricted, general fund and a statement of cash flows.
P19-14
LO 19-4
45 min.
M
Statements for Current Funds of a Voluntary Health and Welfare
Organization [AICPA Adapted]
Students are presented with pre-closing trial balances for the unrestricted and
restricted current funds of a VHWO. The problem requires the preparation of a
statement of support and revenue, expenses, and changes in fund balances for
each of the current funds, and a balance sheet for each of the current funds.
P19-15
LO 19-4
60 min.
M
Comparative Journal Entries for a Governmental Entity and a Voluntary
Health and Welfare Organization [AICPA Adapted]
Four independent transactions must be analyzed and journalized, first assuming
the events are those of a governmental unit, and second, assuming the events are
those of a VHWO.
P19-16
LO 19-3
30 min.
M
Matching Effects of Transactions on a Hospital’s Financial Statements
[AICPA Adapted]
Students must classify six transactions and events as to their effect(s) on the
financial statements of a hospital. Included are designations of resources,
contributions for restricted purposes, and donated services.
Chapter 19 – NOT-FOR-PROFIT ENTITIES
19–11
P19-17
LO 19-3
25 min
E
Balance Sheet for a Hospital
Data is presented for several funds of a hospital. Students must prepare a
balance sheet for the hospital.
P19-18
LO 19-3
20 min.
M
Matching Transactions to Effects on Statement of Changes in Net Assets for
a Hospital
Twelve transactions must be matched with the appropriate effect they have on
the statement of changes in net assets.
P19-19
LO 19-4
30 min.
M
Matching Transactions to Effects on Statement of Activities for a Voluntary
Health and Welfare Organization
Twelve transactions and events are presented, including pledges, and students
must evaluate each of the transactions for their efforts of various classes of assets
through the statements of activities for a VHWO.
P19-20
LO 19-2
25 min.
M
Net Asset Identification for Transactions Involving a Private Not-for-Profit
University
Eleven transactions are required to be classified according to the class of assets
they affect. In addition, the direction of the effect (increase, decrease) must be
identified and the dollar amount calculated.
P19-21
LO 19-4
30 min.
M
Items on Voluntary Health and Welfare Organization [AICPA Adapted]
Six transactions are given for a voluntary health and welfare organization that
follows both ASC 958. Students must determine how each transaction should be
reported on (1) the statement of activities and (2) the statement of cash flows
prepared for the year ended.
P19-22
LO 19-3
20 min.
M
Contributions to a Hospital [AICPA Adapted]
Six transactions are given for a not-for-profit hospital that has adopted an
accounting policy that does not imply a time restriction on gifts of long-lived
assets. Students are required to indicate the effect of the transactions on the
hospital’s financial statements (five effect choices are provided).
P19-23
LO 19-3
40 min.
E
Evaluating Items for a Hospital’s Statement of Operations
Nineteen items must be classified according to their proper classifications on the
statement of operations. Students must choose from three classifications.
P19-24
LO 19-1
through
LO 19-5
40 min.
M
True-False Questions about Not-for-Profit Accounting and Reporting
Students must evaluate the accuracy of 20 statements regarding various private,
nonprofit entities.
P19-25
LO 19-4
35 min.
M
Statement of Activities for a Voluntary Health and Welfare Organization
Students must prepare a statement of activities for a voluntary health and welfare
organization based on information given regarding beginning balances and
transactions that occurred during the year.
Chapter 19 – NOT-FOR-PROFIT ENTITIES
19–12
P19-26
LO 19-1
30 min.
M
Reporting Transactions on the Statement of Cash Flows for Private, Not-
for-Profit Entities
A list of transactions and events that occur in private, not-for-profit entities is
given. Students must indicate where each transaction or event should be reported
on the entity’s statement of cash flows – indirect method.
Chapter 19 – NOT-FOR-PROFIT ENTITIES
19–13
OTHER RESOURCES
Chapter 19
Not-for-Profit Entities
Donations and Pledges to Not-For-Profit Entities
• Donated Assets:
a) If unrestricted – recognized at fair value as contributions in the statement of
operations
b) If restricted in use by the donor – recognized as contribution revenue in the
temporarily restricted or permanently restricted fund at the time of receipt.
• Donated Services:
Recognized only if the services received:
a) create or enhance nonfinancial assets, or
b) require specialized skills, are provided by individuals possessing those skills, and
would typically need to be purchased if not provided by donation
• Pledges:
a) Unconditional pledges are recognized in the period when pledge is received
b) Conditional pledges are recognized when the condition is met
c) Are recorded at fair value of pledge consideration, reduced by the estimated amount
of uncollectible pledges.
d) Recognize present value of future cash flows for pledges expected to be received
beyond one year
• Contributions of art, historical treasures, and similar assets:
Need not be recognized as revenue and capitalized if donated items are to be added
to collections held for public exhibition, education, or research in furtherance of
public service
Chapter 19 – NOT-FOR-PROFIT ENTITIES
19–14
Financial Statements of Voluntary Health and Welfare and Other
Not-For-Profit Organizations (ASC 958)
(1) Statement of Financial Position
Classification of net assets based on existence of donor-imposed restrictions:
Unrestricted
Temporarily restricted
Permanently restricted
(2) Statement of Activities
Classification of revenues, expenses, gains, and losses based on the existence of donor-
imposed restrictions
Unrestricted
Temporarily restricted
Permanently restricted
(3) Statement of Cash Flows
For VHWOs:
(4) Statement of Functional Expenses
Report of expenses by classification type and program