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Question: A private college receives the following pledges


A private college receives the following pledges of support.
1. As part of its annual fund drive, alumni and friends of the college pledge $8 million. The college estimates that about 15 percent of the pledges will prove uncollectible.
2. A CPA firm promises to establish an endowed chair in the accounting department by donating $500,000. The chair agreement will provide that the funds be used to purchase investment grade securities and that the income from the securities be used to supplement the salary of the chair holder and support his or her academic activities.
3. A private foundation promises to donate $100,000 to be used to support a major revision of the college’s accounting curriculum.
4. An alumnus pledges $25,000 to the college’s loan fund, which is used to make loans to students requiring financial assistance.
5. The college is seeking support for construction of a new athletic fieldhouse. A local real estate investor promises to donate 10 acres of land on which a fieldhouse could be built if the college is able to raise the funds required to construct the building. The land has a market value of $1 million.
Indicate the category of net assets (unrestricted, temporarily restricted, or permanently restricted) in which each of the contributions should be recorded and the amount of revenue, if any, that should be recognized when the pledge was made. Briefly explain your response.


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> The data on pages 657–658 pertaining to two not-for-profit hospices were taken from GuideStar, an online database (www.guidestar.org) that provides information about not-for-profit organizations. Names and dates have been changed. The f

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> A public university receives approximately 20 percent of its revenue from state appropriations. In which category of revenues (operating or nonoperating) should it report the state appropriations and why?

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> In what significant ways would each of the three major statements of a government hospital differ from those of a private not-for-profit hospital?

> State law requires that school district budgets be balanced. After having worked for weeks to reduce expenditures to the minimum that would be educationally acceptable and politically feasible, the school board and the superintendent found the budget sti

> Five (of 10) members of a town council returned from the three‐day national convention of town council members in Las Vegas and submitted their expenses for reimbursement. The bills they presented indicated that they had stayed in luxurious suites, had l

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> In verifying the capital asset records of the electric utility department, Jean Hanson, staff auditor of a city’s internal audit department, noted that several trucks and pieces of equipment were out of service and apparently unrepairable. Therefore, the

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> A political official boasts that the year‐end excess of revenues over expenditures was significantly greater than was budgeted. Are “favorable” budget variances necessarily a sign of efficient and effective governmental management? Explain.

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> Why may flexible budgets be more important to a government’s business‐type activities than to its governmental activities?

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> Generally accepted accounting principles require governments to include in their annual reports a comparison of actual results with the budget for each governmental fund for which an annual budget has been adopted. This information is generally presented

> The Disability Research Institute receives its funding mainly from government grants and private contributions. In turn, it supports research and related projects carried out by universities and other not-for‐ profits. Most of its government grants are r

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> Distinguish between nonspendable, restricted, committed, and assigned fund balance.

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> What is a CAFR? What are its main components?

> In what way, if any, does the accounting equation as applied in governmental and not‐for‐profit accounting differ from that as applied in business accounting?

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> The “object classification” budget of a police department includes the following expense categories: • Salaries • Employee benefits • Supplies • Equipment • Vehicle maintenance, gas, etc. • Dues and subscriptions Based on your lay knowledge of the operat

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> Why are there generally no capital projects (work in progress or other long‐lived assets) in governments’ capital projects funds? Why are there generally no long‐term debts in debt service funds?

2.99

See Answer