a. Net assets without donor restrictions at the end of Year 1 b. Net assets without donor restrictions at the end of Year 2 c. Net assets with donor restrictions at the end of Year 2 $ $ $ 240,000 400,000 400,000
a. Net assets without donor restrictions at the end of Year 1 b. Net assets without donor restrictions at the end of Year 2 c. Net assets with donor restrictions at the end of Year 2 $ $ $ 240,000 400,000 400,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily
conform to U.S. generally accepted accounting principles. At the end of the most recent year (Year 2), those financial
statements show total assets of $900,000, total liabilities of $100,000, net assets without donor restriction of $400,000,
and net assets with donor restrictions of $400,000. This last category is composed of $300,000 in net assets with
purpose restrictions and $100,000 in net assets that must be permanently held. At the end of Year 1, financial statements
show total assets of $700,000, total liabilities of $60,000, net assets without donor restriction of $340,000, and net assets
with donor restrictions of $300,000. This last category is composed of $220,000 in net assets with purpose restrictions
and $80,000 in net assets that must be permanently held. Total expenses for Year 2 were $500,000 and reported under
net assets without donor restrictions. Each part that follows should be viewed as an independent situation.
Assume that this entity charges its members $100,000 each year (Year 1 and Year 2). The members get nothing in return for their dues.
The entity consistently records the cash collections as an increase in cash and an increase in exchange revenues under net assets
without donor restrictions. The board of trustees approved a policy several years ago that 10 percent of the money collected from
membership fees be set aside and invested with the money held for emergency purposes. Cash is decreased and "investments held
for emergencies are increased with each purchase.
Required:
a. What is the appropriate amount of net assets without donor restrictions at the end of Year 1?
b. What is the appropriate amount of net assets without donor restrictions at the end of Year 2?
c. What is the appropriate amount of net assets with donor restrictions at the end of Year 2?
Answer is complete but not entirely correct.
a. Net assets without donor restrictions at the end of Year 1
b. Net assets without donor restrictions at the end of Year 2
c. Net assets with donor restrictions at the end of Year 2
$ 240,000
$
400,000
$ 400,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbfbce359-e0c2-41bf-b1fc-85d1fd285cdd%2F5d495f92-6f8d-491e-8a04-456bfc746114%2Fi0slfu1b_processed.png&w=3840&q=75)
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Required information
[The following information applies to the questions displayed below.]
For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily
conform to U.S. generally accepted accounting principles. At the end of the most recent year (Year 2), those financial
statements show total assets of $900,000, total liabilities of $100,000, net assets without donor restriction of $400,000,
and net assets with donor restrictions of $400,000. This last category is composed of $300,000 in net assets with
purpose restrictions and $100,000 in net assets that must be permanently held. At the end of Year 1, financial statements
show total assets of $700,000, total liabilities of $60,000, net assets without donor restriction of $340,000, and net assets
with donor restrictions of $300,000. This last category is composed of $220,000 in net assets with purpose restrictions
and $80,000 in net assets that must be permanently held. Total expenses for Year 2 were $500,000 and reported under
net assets without donor restrictions. Each part that follows should be viewed as an independent situation.
Assume that this entity charges its members $100,000 each year (Year 1 and Year 2). The members get nothing in return for their dues.
The entity consistently records the cash collections as an increase in cash and an increase in exchange revenues under net assets
without donor restrictions. The board of trustees approved a policy several years ago that 10 percent of the money collected from
membership fees be set aside and invested with the money held for emergency purposes. Cash is decreased and "investments held
for emergencies are increased with each purchase.
Required:
a. What is the appropriate amount of net assets without donor restrictions at the end of Year 1?
b. What is the appropriate amount of net assets without donor restrictions at the end of Year 2?
c. What is the appropriate amount of net assets with donor restrictions at the end of Year 2?
Answer is complete but not entirely correct.
a. Net assets without donor restrictions at the end of Year 1
b. Net assets without donor restrictions at the end of Year 2
c. Net assets with donor restrictions at the end of Year 2
$ 240,000
$
400,000
$ 400,000
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Step 1: Introduction to net assets with and without donor restrictions
VIEWStep 2: a. Computation of Net Assets without Donor Restrictions at the End of Year 1
VIEWStep 3: b. Computation of Net Assets without Donor Restrictions at the End of Year 2
VIEWStep 4: c. Computation of Net Assets with Donor Restrictions at the End of Year 2
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