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 on January 1, Year 2, several supporters of the entity spend their own time and money to construct a garage for the entity's vehicles. The results are donated for free. The labor has a fair value of $20,000, and the materials has a fair value of $50,000. The garage is expected to last for 10 years with no anticipated residual value. To record this donation, the entity increases its contributed support under net assets without donor restrictions by $70,000 and increases its expenses under net assets without donor restrictions by the same amount. No further entry is ever made. Required: a. What is the appropriate amount of net assets without donor restrictions at the end of Year 2? b. What is the appropriate amount of total assets at the end of Year 2? c. What is the appropriate amount of expenses for Year 2? Answer is complete but not entirely correct. a. Net assets without donor restrictions at the end of Year 2 b. Total assets at the end of Year 2 c. Appropriate amount of expenses $ 330,000 $ 1,030,000 570,000
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 on January 1, Year 2, several supporters of the entity spend their own time and money to construct a garage for the entity's vehicles. The results are donated for free. The labor has a fair value of $20,000, and the materials has a fair value of $50,000. The garage is expected to last for 10 years with no anticipated residual value. To record this donation, the entity increases its contributed support under net assets without donor restrictions by $70,000 and increases its expenses under net assets without donor restrictions by the same amount. No further entry is ever made. Required: a. What is the appropriate amount of net assets without donor restrictions at the end of Year 2? b. What is the appropriate amount of total assets at the end of Year 2? c. What is the appropriate amount of expenses for Year 2? Answer is complete but not entirely correct. a. Net assets without donor restrictions at the end of Year 2 b. Total assets at the end of Year 2 c. Appropriate amount of expenses $ 330,000 $ 1,030,000 570,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text: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 on January 1, Year 2, several supporters of the entity spend their own time and money to construct a garage for the
entity's vehicles. The results are donated for free. The labor has a fair value of $20,000, and the materials has a fair value of $50,000.
The garage is expected to last for 10 years with no anticipated residual value. To record this donation, the entity increases its
contributed support under net assets without donor restrictions by $70,000 and increases its expenses under net assets without
donor restrictions by the same amount. No further entry is ever made.
Required:
a. What is the appropriate amount of net assets without donor restrictions at the end of Year 2?
b. What is the appropriate amount of total assets at the end of Year 2?
c. What is the appropriate amount of expenses for Year 2?
Answer is complete but not entirely correct.
a. Net assets without donor restrictions at the end of Year 2
b. Total assets at the end of Year 2
c. Appropriate amount of expenses
$
330,000
$
1,030,000
570,000
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