Question 1

Sheridan Public School Foundation had available temporarily restricted gifts in excess of $200,000.The Foundation decided to invest this money temporarily until it needs the funds for the restricted purpose.The donors had made no specific stipulations regarding investment earnings but the Foundation board had voted to use the earnings on the projects for which the gift had originally been restricted.At year-end, the securities had a fair value of $200,500.The appropriate way to recognize the change in fair value is

Accepted Answer

The answer of Sheridan Public School Foundation had available temporarily...

Question 2

The Friends of the Library (FOL), a not-for-profit entity, received a gift restricted to acquisition of a special piece of the equipment used to restore books.Late last year FOL acquired the machine at a total cost of $19,000.The machine is estimated to have a useful life of eight years and a salvage value of $3,000.In what fund should FOL make the entry to record the depreciation for the current year?

Accepted Answer

The answer of The Friends of the Library (FOL), a...

Question 3

Music Lovers Foundation, a not-for-profit governed by an independent board, was founded to support the Northern State University Choir until such time as the state legislature shall adequately fund the choir.When the Choir is adequately funded by appropriation the Foundation may direct resources to other music projects that it deems acceptable.When Music Lovers accepts a contribution from a donor it should debit cash and/or other assets and credit

Accepted Answer

The answer of Music Lovers Foundation, a not-for-profit governed by...

Question 4

The Save the Animals Foundation received a gift of $500,000 from a donor who wanted the gift used to acquire habitat for endangered snails.The money may be invested but all earnings are restricted to habitat acquisition.During the year all of the gift was invested in corporate securities.At year-end, the securities had a value of $501,0000.The appropriate way to recognize the change in fair value is

Accepted Answer

The donor has specified that the earnings from the investment of the gift should be restricted to habitat acquisition for endangered snails. Therefore, the earnings are temporarily restricted until they are used for the specified purpose. The increase in fair value of the investment should be recognized with a debit to Investment and a credit to Temporarily Restricted Revenue, as the earnings are restricted for a specific purpose and not yet available for use in the organization's normal activities.

Quiz 12: Not-For-Profit Organizations