Concept explainers
1.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate: The recording of receipt of unconditional cash contribution by private universities.
1.
Answer to Problem 1E
The unconditional cash contribution is recorded as Credit contribution unrestricted.
Explanation of Solution
The above-stated transaction will be recorded as credit contribution because revenues are recognized in the year in which it is received. The contribution will be considered unrestricted because there is no restriction on its usage.
2.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate:The recording of receipt of cash to be used for a specific purpose by private universities.
2.
Answer to Problem 1E
Receipt of cash to be used for a specific purpose is recorded as Credit contribution temporarily restricted.
Explanation of Solution
The above-stated transaction will be recorded as credit contribution because revenues are recognized in the year in which it is received. The contribution will be considered as restricted because the contribution can be used for a specific purpose only. The restriction will be released once the condition of the donor will be met.
3.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate:The recordingof receipt of an unconditional promise to give by private universities
3.
Answer to Problem 1E
The unconditional cash contribution is recorded as Credit contribution unrestricted.
Explanation of Solution
The above-stated transaction will be recorded as credit contribution because revenues are recognized in the year in which it is received. The contribution will be considered as unrestricted because there is no restriction imposed by the donor on its usage.It will be recorded by debiting contributions receivable account and credit revenue unrestricted contribution.
4.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate:The recording of an unconditional promise to give over a 5 years period by private universities.
4.
Answer to Problem 1E
Unconditional cash contribution is recorded as Credit contribution unrestricted.
Explanation of Solution
The above stated transaction will be recorded as credit contribution because revenues are recognized in the year in which it is received. The contribution will be considered as unrestricted because there is no restriction imposed by the donor on its usage. It will be recorded by debiting contributions receivable account and credit revenue unrestricted contribution.
5.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate:The recording of receipt of investments that are to be used to set up an endowment with earnings available for operations by private universities.
5.
Answer to Problem 1E
Credit contributions − permanently restricted
Explanation of Solution
The above stated transaction will be recorded as credit contribution because revenues are recognized in the year in which it is received. The contribution is permanently restricted as there is preconditions imposed by the contributor regarding utilisation of contribution, but earnings on such contributions are free from restrictions and can be used as unrestricted.
6.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate:The recording of receipt of a fixed asset with donor-specified use for an outreach program.
6.
Answer to Problem 1E
Credit contributions − temporarily restricted
Explanation of Solution
The above stated transaction will be recorded as credit contributions because receipt of contribution is recorded in the year in which it is received. The transaction will be recorded as temporarily restricted because the fixed asset can be used only for specific purpose. The restriction will be released when the asset is placed over useful life of the asset.
7.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate: The recording of receipt of a conditional promise to give.
7.
Answer to Problem 1E
No entry
Explanation of Solution
No entry will be made to record the stated transaction because the contribution is not received. It is only a promise. The entry will be recorded only when conditions will be met.
8.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate: The recording of receipt of a fixed asset with no donor restriction.
8.
Answer to Problem 1E
Credit contributions − unrestricted
Explanation of Solution
The above stated transaction will be recorded as credit contributions because receipt of contribution is recorded in the year in which it is received. The transaction will be recorded as unrestricted because the fixed asset can be used freely without any restrictions.
9.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate:The recording of receipt offree accounting service.
9.
Answer to Problem 1E
Credit contribution - Unrestricted
Explanation of Solution
The above stated transaction will be recorded as credit contributions because receipt of contribution is recorded in the year in which it is received. Receiving any contribution by way of skills are considered as unrestricted. Hence, it would be treated as an unrestricted contribution.
10.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
To indicate:The recording of receipt of time of volunteers who helped with fund raising mailings.
10.
Answer to Problem 1E
No entry
Explanation of Solution
The above stated transaction is not a skilled service. It is volunteer in nature and no payment is made for it. Hence, no entry will be made for recording the stated transaction. However, a disclosure can be made in the footnotes for recording it.
11.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
Credit contributions can be treated as unrestricted, temporarily restricted, permanently restricted depending on the conditions applied by the contributors.
Unrestricted funds are credit contributions where no donor restrictions are applied, these funds usually used towards the operating expenses of the organization.Temporarily restricted funds have some restrictions regarding the usage of such funds. Permanently restricted contributions which are permanently restricted by explicit donor stipulations of by law.
To indicate:The recording of receipt of a cash contribution to be used next year for general operations at the discretion of management.
11.
Answer to Problem 1E
Credit contributions − temporarily restricted
Explanation of Solution
The above stated transaction will be recorded as credit contributions because receipt of a cash contribution is recorded in the year in which it is received, whether it is used or not. The transaction will be recorded as temporarily restricted because the contribution has time restriction, when the time restriction will be satisfied, restriction will be released.
12.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
Credit contributions can be treated as unrestricted, temporarily restricted, permanently restricted depending on the conditions applied by the contributors.
Unrestricted funds are credit contributions where no donor restrictions are applied, these funds usually used towards the operating expenses of the organization.Temporarily restricted funds have some restrictions regarding the usage of such funds. Permanently restricted contributions which are permanently restricted by explicit donor stipulations of by law.
To indicate:The recording of receipt of a cash contribution to be used next year for research project.
12.
Answer to Problem 1E
Credit contributions − temporarily restricted
Explanation of Solution
The above stated transaction will be recorded as credit contributions because receipt of a cash contribution is recorded in the year in which it is received, whether it is used or not. The transaction will be recorded as temporarily restricted because the contribution has time restriction, when the expenses will be incurred in the next year, restriction will be released.
13.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
Credit contributions can be treated as unrestricted, temporarily restricted, permanently restricted depending on the conditions applied by the contributors.
Unrestricted funds are credit contributions where no donor restrictions are applied, these funds usually used towards the operating expenses of the organization. Temporarily restricted funds have some restrictions regarding the usage of such funds. Permanently restricted contributions which are permanently restricted by explicit donor stipulations of by law.
To indicate:The recording of receipt of a cash as part of a government grant funding a cancer research project. A report with research results will be prepared for government funding agency.
13.
Answer to Problem 1E
Credit refundable deposit
Explanation of Solution
The above stated transaction is recorded as revenue. The cash receipts will have to be refund to the government agency as receipts are collected on behalf of the government. Therefore, the stated transaction will be recorded as credit refundable deposit.
14.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
Credit contributions can be treated as unrestricted, temporarily restricted, permanently restricted depending on the conditions applied by the contributors.
Unrestricted funds are credit contributions where no donor restrictions are applied, these funds usually used towards the operating expenses of the organization. Temporarily restricted funds have some restrictions regarding the usage of such funds. Permanently restricted contributions which are permanently restricted by explicit donor stipulations of by law.
To indicate:The recording of receipt of a cash contribution to be used for acquisition of fixed asset.
14.
Answer to Problem 1E
Credit contributions − temporarily restricted
Explanation of Solution
The above stated transaction will be recorded as credit contributions because receipt of a cash contribution is recorded in the year in which it is received, whether it is used or not. The transaction will be recorded as temporarily restricted because the contribution can be used only for the acquisition of fixed assets. The restriction will be released when the asset is placed over useful life of the asset.
15.
Concept Introduction:
Accounting for contributions:
Contributions are defined by FASB Statement No 116, as “a settlement of a liability or the cancellation of the liability, any unconditional transfer made for the cash and other assets to an entity in a voluntary nonreciprocal transfer. Private colleges and universities recognize contributions and unconditional promises to give as revenues or gains in the period received.
Credit contributions can be treated as unrestricted, temporarily restricted, permanently restricted depending on the conditions applied by the contributors.
Unrestricted funds are credit contributions where no donor restrictions are applied, these funds usually used towards the operating expenses of the organization. Temporarily restricted funds have some restrictions regarding the usage of such funds. Permanently restricted contributions which are permanently restricted by explicit donor stipulations of by law.
To indicate: The recording of receipt of a permanent collection of geography maps that will be displayed to the public
15.
Answer to Problem 1E
No entry
Explanation of Solution
The above stated transaction will not be recorded because the contribution is not received in cash. The contribution received will be displayed to the public and therefore, it will not be recorded by the private university.
Want to see more full solutions like this?
Chapter 19 Solutions
ADVANCED ACCOUNTING
- On September 1, your business had a beginning cash balance of $500. Your sales for August were $800, and your sales for September totaled $1,000. During September, you paid $200 in cash expenses and paid off $350 of accounts payable. Your accounts receivable collection period is 30 days. What is your firm's beginning cash balance on October 1?arrow_forwardFranklin Company had a beginning raw materials inventory of $9,500. During the period, the company purchased $52,000 of raw materials on account. If the ending balance in raw materials was $7,000, what is the amount of raw materials transferred to work in process inventory? I. $54,500 II. $50,500 III. $44,000 IV. $52,000arrow_forwardOn January 2, 20X1, Fairmont Industries, which uses the Units of Production (UOP) depreciation method, purchases a machine for $20,000. The company estimates that the machine will have a useful life of 18,000 machine hours and a salvage value of $2,000. You are given the following usage data: . 20X13,500 hours 20X2 2,700 hours = . 20X3 = 6,500 hours • 20X44,300 hours What is the depreciation expense for 20X4?arrow_forward
- Financial accounting questionarrow_forwardSales for GreenTech Company amounted to $250,000, and the gross profit was $87,500. Calculate the Gross Profit (GP) ratio for GreenHill Company.arrow_forwardAccounting/Cash flow : Camel Corporation (a C corporation) sold $100,000 of merchandise for which it paid $40,000. It also paid $35,000 of other expenses. All transactions were in cash. What is Camel Corporation's after-tax net cash inflow? [Assume the corporate tax rate is 15%] a. $100,000 b. $21,250 c. $25,000 d. $60,000 choose correct optionarrow_forward
- Give me solution accounting questionarrow_forwardGet correct answer this general accounting questionarrow_forwardJasper Company's output for the current period was assigned a $225,000 standard direct materials cost. The direct materials variances included a $15,500 favorable price variance and a $3,200 favorable quantity variance. What is the actual total direct materials cost for the current period?arrow_forward
