Question

In: Accounting

Explain the three types of net assets used in the not-for-profit environment. Discuss the change in...

Explain the three types of net assets used in the not-for-profit environment. Discuss the change

in the dislosure of net assets discussed in a FASB proposal.

Solutions

Expert Solution

Three types of Net Assets used in Non profit Environment
Net Assets refers to the Difference betweem Total assets - total Liabilities except
Equity funds. Net assets classified in Three categories in non profit environment
1. Unrestricted Net Assets: these assets are used for daily operation activities .
2. Temporarily restricted:     When Non Profit organisation receive fund and same
                                                         will be hold for spent on certain activites or in future
                                                         activities these fund are blocked temporarily
3. Permanently Restricted:   These types of Net assets endowment funds and other
                                                          same kind of funds for its perpetuity. Non Profit environment
                                                   can only use the income generated from these types of funds
  
Change in the dislosure of net assets discussed in a FASB proposal
FASB classify net assets in two types of cetegory
Without Restriction: these types of assets represents assets that’s are not subjects to
                                            donor restrictions
With Restrictions :   These are the asssts that’s are subjects to donor restrction like Endowment funds
Discouser Required as FASB
Following Discloser required in not environment business as follows
Net Asset Classes
Investment Return
Expenses
Liquidity and Availability of Resources
Presentation of Operating Cash Flows.

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