Question

You are preparing a statement of activities for the University of Richland, a private not-for-profit entity. The following questions should be viewed as independent of each other.

1.  During the current year, a donor gives $429,000 in cash to the school and stipulates that it must hold this money forever. However, any investment income earned on this money must be used for faculty salaries. During the current year, the investment earned $41,000 and, of that amount, the school has expended $26,000 appropriately to date. As a result of these events, what was the overall change in each of the following for the current year?

a. Unrestricted net assets.

b. Temporarily restricted net assets.

c. Permanently restricted net assets.

2. A donor gives a large machine to the school on January 1 of the current year. It has a value of $214,000, no salvage value, and a 8-year life. The donor requires that the school keep the machine and use it for all 8 years, and the school agrees. It cannot sell or retire the machine in the interim. As a result of these events, what was the overall change in each of the following for the current year?

a. Unrestricted net assets.

b. Temporarily restricted net assets.

c. Operating expenses.

3. Several years ago, a donor gave the school $390,000 in cash to help fund its financial aid program. This year, the school charged $2.40 million in tuition but granted $790,000 in financial aid. Collections to date from the students have totaled $1.50 million. The donor’s gift has offset $400,000 of the financial aid. As a result of these events, what was the overall change in each of the following for the current year?

a. Unrestricted net assets.

b. Operating expenses.

c. Temporarily restricted net assets.

Answer 1

Answer :-

1 ) :-

a ) .

• There is no net change for unlimited net resources as the intrigue pay was spent appropriately and a renaming of $26,000 is made into unhindered net resources .
• The balancing originates from the detailing of the compensation cost .

b) .

• The $41,000 venture pay is recorded as briefly confined resources in light of the fact that the utilization is limited for compensation installment of faculty.
• It is decreased by $26,000 when that sum is renamed as unhindered resources yo legitimately pay for personnel pay rates .

c ) .

• The for all time limited resources increments by $429,000 from the gift to the school .
• It is stipulated to be held perpetually and that earned venture salary is to be utilized for pay rates for personnel .

2 ) ;-

a ).

• There is no net change in unlimited net resources as the gave machine is required to be utilized completely for a long time .
• On the off chance that this stipulation were not required, it would be recorded here.However , because of devaluation , $21,400 will be recorded as unlimited resources however will at that point be counterbalanced from being renamed as a deterioration cost .

b ) .

• At first , the full estimation of $214,000 is recorded in incidentally limited assets.
• Due to devaluation , $21,400 will be exchanged and renamed as a deterioration cost .
• There by leaving an equalization of $21,400 in incidentally confined net resources.

c ) . Working costs increment by $21,400 from the deterioration cost toward the year's end.

3 ) :-

a ) .

• Calculate the net change in unhindered resources.

Change = [ $2.40 million + $400,000] - $790,000

= $2,800,000 - $790,000

= $2,010,000

Change = $2,010,000

• The $400,000 was recently named an incidentally limited resource yet was renamed as an unlimited resource, which caused an expansion in the aggregate sum .
• The net change in unlimited resources is $2,010,000 .

b ) .

• There is no change to working costs as the money related guide sum is a decrease in educational cost income and not considered a cost.

c ) .

• This classification of briefly confined resources is diminished by $400,000 when it was renamed as unlimited for appropriate use.