Chapter 19 – Not-for-Profit Entities
Q19-1 Initially, tuition scholarships are included in revenue for the period in order to
measure fully the revenue obtainable. If the university requires an employment-type
Q19-2 In the statement of financial position for private colleges, the net assets are
designated as (1) unrestricted, (2) temporarily restricted, or (3) permanently restricted.
Q19-3 The accounting and reporting for public universities is specified by the GASB,
and GASB 35 provides specific guidance that public universities should be accounted
Q19-4 The accrual basis of accounting is used in a hospital’s general and restricted
Q19-5 Donated services are included as a revenue and a corresponding expense at
their fair value if the services are significant and would otherwise be performed by
salaried personnel. The criteria for recognition require that the services either (a) create
Q19-6 The $15,000 is accounted for as a contribution to a specific purpose restricted
fund. When the $15,000 is expended by the general fund, the specific purpose restricted
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C19-1 Accounting for Donations
require:
1.
The services performed create or enhance nonfinancial assets or,
2.
The services (a) require specialized skills, (b) are provided by individuals
possessing those skills, and (c) the services would be purchased if not
donated.
In general, donated services are not recognized unless they represent an important
contribution to the operations of the organization. For example, in the hospital setting, a
volunteer who staffs a nursing station on a regular shift but accepts no compensation
persons providing the services, VHWOs normally do not account for donated services
unless the first three criteria are met. Even when these are met, it may be appropriate to
recognize the donated services only if the amount of time donated is significant and
represents an integral part of the activities provided by the organization.
Other not-for-profit organizations often rely heavily on donated services as well.
Chapter 19 – Not-for-Profit Entities
b. The Consolidated Statements of Financial Position includes eliminations for intra–
organizational payables and receivables (Due from affiliates and Due to affiliates) and
the capital accounts of the for-profit United Way Store (against the investment in
the Emergency Food and Shelter (EF&S) program which is not consolidated into UWW’s
financial statements. UWW is the custodian of the federal funds and distributes these
funds in accordance with the directions of the national board established to determine
needs that can be met with these funds. Thus, UWW reports both an asset and a liability
in the same amount for any undistributed funds for which it is the custodian.
