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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information
Problem 18-45 (Static) (LO 18-1, 18-2, 18-4, 18-5, 18-8)
[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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5bd24d5e-ed33-4881-8643-64f182425bac%2F18c5581c-29dc-48e6-a836-9ab025799f2b%2Ffn3sdj_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
Problem 18-45 (Static) (LO 18-1, 18-2, 18-4, 18-5, 18-8)
[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, at the beginning of Year 1, the entity received $50,000 in cash as a donation with the
stipulation that the money be used to buy a bus or be returned to the donor. At that time, the entity
increased cash and increased contributed revenue under net assets with donor restrictions. On the first
day of Year 2, the $50,000 was spent on the bus. The entity reclassified $50,000 from net assets with
donor restrictions to net assets without donor restrictions. At the end of Year 2, the entity recorded $5,000
as depreciation expense, a figure that was shown as a reduction under net assets without donor
restrictions.
Required:
a. What was the appropriate amount of net assets with donor restrictions to be reported at the end of Year
1?
Net assets with donor restrictions to be reported at the end of Year 1
b. What was the appropriate amount of net assets without donor restrictions to be reported at the end of
Year 2?
Net assets without donor restrictions to be reported at the end of Year 2
c. What was the appropriate amount of expenses to be reported under net assets without donor
restrictions for the year ending December 31, Year 2?
Expenses to be reported
d. What was the appropriate amount of net assets with donor restrictions to be reported at the end of Year
2?
Net assets with donor restrictions to be reported at the end of Year 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5bd24d5e-ed33-4881-8643-64f182425bac%2F18c5581c-29dc-48e6-a836-9ab025799f2b%2Fbovka4j_processed.png&w=3840&q=75)
Transcribed Image Text:Assume that, at the beginning of Year 1, the entity received $50,000 in cash as a donation with the
stipulation that the money be used to buy a bus or be returned to the donor. At that time, the entity
increased cash and increased contributed revenue under net assets with donor restrictions. On the first
day of Year 2, the $50,000 was spent on the bus. The entity reclassified $50,000 from net assets with
donor restrictions to net assets without donor restrictions. At the end of Year 2, the entity recorded $5,000
as depreciation expense, a figure that was shown as a reduction under net assets without donor
restrictions.
Required:
a. What was the appropriate amount of net assets with donor restrictions to be reported at the end of Year
1?
Net assets with donor restrictions to be reported at the end of Year 1
b. What was the appropriate amount of net assets without donor restrictions to be reported at the end of
Year 2?
Net assets without donor restrictions to be reported at the end of Year 2
c. What was the appropriate amount of expenses to be reported under net assets without donor
restrictions for the year ending December 31, Year 2?
Expenses to be reported
d. What was the appropriate amount of net assets with donor restrictions to be reported at the end of Year
2?
Net assets with donor restrictions to be reported at the end of Year 2
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