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Page 1

Chapter 22

Problem I
(1) a Recognized in period received.

(2) b Recognized in period received. Restriction is released when expenses are incurred.

(3) a Recognized in period made.

(4) a Recorded at present value at time promise to give is received.

(5) c Endowment principal cannot be spent. Earnings are unrestricted.

(6) b Recognized in period received. Restriction released either (1) when asset is placed
in service or (2) over its useful life.

(7) f Recognized when conditions are met.

(8) a Recorded at fair value when received.

(9) a Donated services of a skilled nature that would otherwise be purchased.

(10) f Not skilled services. May be footnoted.

(11) b Recognized in period received. Restriction is released when time restriction is
satisfied.

(12) b Recognized in period received. Restriction is released when expenses are incurred.

(13) d Recognized revenue as expenses are incurred for research project.

(14) b Recognized in period received. Restriction is released either (1) when asset is placed
in service or (2) over useful life of asset.

(15) a, b, or f (If collection is displayed to the public or otherwise held for exhibit, the university
is not required to recognize contributions as revenue.)

Problem II
(a) Cash...................................................................................................... 200,000

Revenues—Temporarily Restricted Contributions ................. 200,000

(b) Expenses............................................................................................... 110,000
Cash ............................................................................................... 110,000

Reclassifications Out—Temporarily Restricted—
Satisfaction of Program Restrictions......................................... 110,000

Reclassifications In—Unrestricted—
Satisfaction of Program Restrictions ........................... 110,000

(c) Reclassifications Out—Temporarily Restricted—
Satisfaction of Program Restrictions......................................... 90,000

Reclassifications In—Permanently Restricted—
Satisfaction of Program Restrictions ........................... 90,000

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Permanently Restricted Net Assets—Mandatory
Transfer-Out .................................................................................. 90,000

Due to Endowment Fund.................................................... 90,000

Note to Instructor: The following entry would be made in the endowment fund:

Due from Restricted Current Fund .................................................. 90,000
Permanently Restricted Net Assets—Mandatory

Transfer-In ............................................................................... 90,000

(d) Cash...................................................................................................... 15,000
Revenues—Temporarily Restricted Contributions ................. 15,000

Problem III
(1) (a) Cash ....................................................................................................... 90,000

Revenues—Temporarily Restricted Contributions................... 45,000
Revenues—Permanently Restricted Contributions................. 45,000

Endowment Investments .................................................................... 45,000
Cash................................................................................................. 45,000

(b) Cash ....................................................................................................... 1,686,000
Accounts Receivable ......................................................................... 148,000
Deferred Revenues.............................................................................. 66,000

Revenues—Student Tuition and Fees ........................................ 1,900,000

Cash ....................................................................................................... 158,000
Deferred Revenues ....................................................................... 158,000

(c) Cash ....................................................................................................... 308,000
Allowance for Uncollectible Tuition and Fees ................................ 12,000

Accounts Receivable................................................................... 320,000

Expenses—Institutional Support (Provision for Uncollectible
Tuition and Fees) ........................................................................... 9,000

Allowance for Uncollectible Tuition and Fees .................. 9,000

(d) Cash ....................................................................................................... 6,000
Revenues—Unrestricted Investment Income .......................... 6,000

(e) Cash ....................................................................................................... 75,000
State Appropriations Receivable............................................... 75,000

State Appropriations Receivable ..................................................... 40,000
Revenues—State Government Appropriations ...................... 40,000

(f) Cash ....................................................................................................... 30,000
Revenues—Temporarily Restricted Contributions................... 30,000

(g) Cash ....................................................................................................... 24,000
Investments..................................................................................... 21,000
Revenues—Temporarily Restricted Gain on the Sale of

Investments.............................................................................. 1,100
Revenues—Temporarily Restricted Investment Income........ 1,900

(h) Expenses—Instruction.......................................................................... 500,000

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Expenses—Operation and Maintenance of Plant ........... 400,000
Expenses—Student Aid .......................................................... 350,000

Revenues—Sales and Services of Auxiliary Enterprises500,000
Expenses—Auxiliary

Enterprises............................................................................ 475,000
Unrestricted Net Assets ....................................................... 25,000

Revenues—Temporarily Restricted Contributions .................. 200,000
Revenues—Temporarily Restricted Endowment

Income...................................................................................... 15,000
Revenues—Temporarily Restricted Net Realized Gains

on Endowment ........................................................................ 25,000
Temporarily Restricted Net Assets .......................................... 135,000

Reclassifications Out—Temporarily Restricted—
Satisfaction of Program Restrictions ............................... 75,000

Reclassifications Out—Temporarily Restricted—
Expiration of Time Restrictions.......................................... 50,000

Reclassifications Out—Temporarily Restricted—
Satisfaction of Equipment Acquisition Restrictions ...... 250,000

Revenues—Permanently Restricted
Contributions............................................................................ 500,000

Permanently Restricted Net Assets............................... 500,000

(2) University of Cebu
Statement of Activities

For Year Ended December 31, 20x8

Temporarily Permanently
Unrestricted Restricted Restricted Total

Changes in net assets:
Revenues and gains:

Tuition and fees .................................................... P1,500,000 P1,500,000
Contributions......................................................... 265,000 P 200,000 P 500,000 965,000
Government appropriations, grants, and

contracts .......................................................... 800,000 800,000
Investment income on endowment ................ 15,000 15,000
Net realized gains on endowment investments 25,000 25,000

Other investment income ............................. 250,000 250,000
Sales and services of auxiliary enterprises ....... 500,000 500,000

Total revenues and gains .............................. P3,315,000 P 240,000 P 500,000 P4,055,000

Net assets released from restrictions:
Satisfaction of program restrictions ....................... P 75,000 P (75,000) P 0
Satisfaction of equipment acquisition restrictions 250,000 (250,000) 0
Satisfaction of time restrictions ............................... 50,000 (50,000) 0

Total net assets released from restrictions ....... P 375,000 P(375,000) P 0
Total revenues and gains and other support P3,690,000 P(135,000)P 500,000 P4,055,000

Expenses:

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Research ..................................................................... P 840,000 P 840,000
Instruction ................................................................... 1,230,000 1,230,000
Academic support.................................................... 250,000 250,000
Student services......................................................... 200,000 200,000
Institutional support................................................... 225,000 225,000
Operation and maintenance of plant ................. 400,000 400,000
Student aid ................................................................. 350,000 350,000
Auxiliary enterprises................................................... 475,000 475,000

Total expenses ...................................................... P3,970,000 P 0 P 0 P3,970,000
Increase (decrease) in net assets................ P (280,000) P(135,000) P 500,000 P 85,000

Net assets, January 1, 20x8........................................... 675,000 975,000 2,500,000 4,150,000
Net assets, December 31, 20x8.................................. P 395,000 P 840,000 P3,000,000 P4,235,000

Problem VI
University of Cebu

Statement of Financial Position
December 31, 20x8

Assets:
Cash .............................................................................................................................. P 255,000
Accounts receivable ................................................................................................. 625,000
Contributions receivable .......................................................................................... 85,000
Inventory of supplies .................................................................................................. 75,000
Student loans receivable.......................................................................................... 300,000
Land, buildings, and equipment (net) ................................................................... 1,000,000
Endowment investments........................................................................................... 3,025,000

Total assets........................................................................................................ P5,365,000
Liabilities:

Accounts payable ..................................................................................................... P 220,000
Amounts held on behalf of others .......................................................................... 250,000
Long-term debt........................................................................................................... 560,000
U.S. government grants refundable ....................................................................... 100,000

Total liabilities ................................................................................................... P1,130,000
Net assets:

Unrestricted ............................................................................................................. P 395,000
Temporarily restricted ............................................................................................ 840,000
Permanently restricted........................................................................................... 3,000,000

Total net assets ................................................................................................. P4,235,000
Total liabilities and net assets .......................................................................................... P5,365,000

Problem VII
(1) Patient service revenues include charges to patients for routine services, nursing services,

and professional services.

Other operating revenues include revenues from services other than health care provided
to patients as well as from sales and services to persons other than patients.

Nonoperating revenues are primarily from gifts, grants, and investment income and gains
that are peripheral or incidental to the major operation of the hospital.

(2) a. OO d. PS g. OO j. PS

Page 12

Theories
Completion Statements

1. unconditional
2. nonreciprocal
3. unconditional
4. when received
5. conditional
6. fair value
7. market quotations, appraisals, present-value calculations
8. nonfinancial assets, specialized skills
9. fair value, asset or asset enhancement

10. collection items
11. selectively
12. unrestricted, temporarily restricted, permanently restricted
13. endowments
14. temporarily restricted
15. temporarily restricted
16. temporarily restricted, unrestricted, donor-imposed stipulations, accounting policy,

explicit donor instructions
17. expire
18. whole
19. donor-imposed restrictions, donor-imposed restrictions
20. total assets, total liabilities, total net assets (equity)
21. unrestricted, temporarily restricted, permanently restricted
22. board-designated, unrestricted
23. category
24. unrestricted
25. separately
26. natural, matrix
27. gross
28. columnar, layered
29. change
30. direct, indirect
31. permits

True or False Statements
32. True 43. True 54. True 65. True
33. False 44. False 55. False 66. False
34. False 45. False 56. True 67. False
35. True 46. False 57. False 68. True

14. d 34. a
15 b 35 c
16. d 36. a
17. a 37. a
18. e 38. d
19. c 39. b
20. b 40. d

Page 13

36. True 47. False 58. False 69. True
37. False 48. False 59. False 70. True
38. False 49. True 60. True 71. False
39. True 50. False 61. True 72. False
40. True 51. True 62. True 73. False
41. True 52. False 63. True
42. False 53, False 64. True

Multiple Choice Theories
74. a 84. a 94. e 104. a 114. c 124. b 134. d 144. c
75. c 85. d 95. a 105. b 115. b 125. d 135. c 145. c
76. b 86. c 96. b 106. d 116. b 126. b 136. c 146. a
77. b 87. e 97. b 107. c 117. b 127. c 137. b 147. **
78. e 88. e 98. d 108. b 118. d 128. a 138. d 148. c
79. e 89. d 99. d 109. b 119. * 129. d 139. b 149. a
80. e 90. c 100. d 110. a 120. d 130. d 140. b 150. b
81. e 91. d 101. a 111. b 121. b 131. d 141. c 151. b
82. d 92. d 102. b 112. b 122. d 132. d 142. b 152. c
83. a 93. c 103. a 113. d 123. e 133. b 143. c

*contribution revenue
**incomplete data

Note for Nos.:
148. (The work of the librarian does not enhance a nonfinancial asset nor does it require a specialized skill that would be

purchased if not donated.)
149. (The FASB wanted to get away from fund accounting and provide information about the private not-for-profit

organization as a whole.)

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