The following facts and transactions are reflected in the illustrative financial statements in Example 1. The transactions are presented by class of net assets to facilitate locating their effects in the statements and notes. The transactions in (a) through (hh) affect net assets without donor restrictions. The transactions in (i) through (n), (s), (t), and (w) affect net assets with donor restrictions. The transactions in (hhh), (o) through (r), and (u) affect both classes of net assets.
- aNot-for-Profit Entity A invested cash in excess of daily requirements in short-term investment instruments. Interest earned on these investments totaled $850, which is included in the net investment return on the statement of activities. The governing board previously designated a portion of net assets without donor restrictions for long-term investment (quasi-endowment). Those assets earned $5,800, comprising $2,000 of dividends, interest, and rents and $3,800 of realized and unrealized net gains.
- bNot-for-Profit Entity A received contributions without donor restrictions of the following: cash, $5,120; recognizable contributed services, $300; other consumable assets, $1,410; equipment, $140; and unconditional promises to give to support activities of 20X1, $1,020.
- cEquipment with an original cost of $660 and accumulated depreciation of $330 was destroyed in a fire. Insurance proceeds of $250 were received. The equipment was originally purchased with assets without associated donor restrictions.
- dAll conditions of a prior year's grant of $650 were substantially met. The grant proceeds were originally recorded as a refundable advance.
- eNot-for-Profit Entity A made a payment of $425 on its prior year unconditional grant to an unrelated agency.
- fNot-for-Profit Entity A repaid $1,140 of its notes payable. Interest of $32 was incurred and paid on these notes.
- gNot-for-Profit Entity A repaid $1,000 of its long-term debt. Interest of $350 was incurred and paid on the debt.
- hDepreciation amounted to $3,200.
- hhNot-for-Profit Entity A sold equipment that was fully depreciated for $200.
- hhhNot-for-Profit Entity A's financial assets consisted of cash and cash equivalents, short-term investments, accounts and interest receivable, contributions receivable, assets restricted to investment in land, buildings, and equipment, and long-term investments. The $193,490 of donor-restricted net assets included the net assets resulting from contributions receivable of $1,000, which were without purpose restrictions and were due within one year. The remaining amounts of contributions receivable were either purpose-restricted or due in greater than one year. In addition, amounts made unavailable by the governing board included $36,600 of board-designated long-term investments. The $1,300 liquidity reserve, created in a prior year when the governing board designated net assets without donor restrictions, was included as a reconciling item in Not-for-Profit Entity A's note on liquidity risk and the availability of resources because the intention of the designation was to support unanticipated liquidity needs and not general expenditures.
- iNot-for-Profit Entity A received contributions with donor restrictions as follows.
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Restricted to: Cash Consumable Assets Promises to Give Program purposes \" $2,170 \" $960 $920 Use in future periods 740 1000 \"Acquisition of land, buildings, and equipment\" 770 \" 1,380 \"
- iiThe composition of assets restricted to investment in land, buildings, and equipment as of June 30, 20X1, and 20X0, is shown below. The change in restricted cash below represents a purchase of investments restricted to investment in land, buildings, and equipment.
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6/30/20X1 6/30/20X0 Restricted cash $60 $160 Contributions receivable \" 2,440 \" \" 1,500 \" Investments \" 2,710 \" \" 2,900 \" \" $5,210 \" \" $4,560 \"
- jIn addition, a donor transferred cash of $200 to set up an annuity trust having a related annuity obligation with a present value of $100. Upon the death of the beneficiary, the remaining interest will be used for a donor-restricted purpose.
- kIn addition, a donor contributed cash of $70 to create a term endowment. At the end of 15 years the endowment assets can be used to support Not-for-Profit Entity A's operations.
- lNot-for-Profit Entity A made payments of $145 to beneficiaries of annuity trust agreements.
- mA donor contributed a paid-up life insurance policy with a cash surrender value of $80. Upon the death of the insured, the death benefit must be used to create a donor-restricted endowment fund. There was no change in the cash surrender value between the date of the gift and the end of the fiscal year.
- nA donor contributed cash of $200 to create a donor-restricted endowment fund. The income is restricted to use for Program A activities.
- oNot-for-Profit Entity A collected promises to give of $3,055: $980 of amounts for general purposes, $610 of amounts restricted to future periods, $1,025 of amounts restricted to program purposes, and $440 of amounts for acquisition of land, buildings, and equipment.
- pNot-for-Profit Entity A utilized all of the $1,410 consumable assets contributed for general purposes, and $350 of the $960 consumable assets contributed for program purposes.
- qA trust annuitant died and the $400 remainder interest became available for the general use of Not-for-Profit Entity A. Management decided to invest the remainder interest in short-term investments. The actuarial gain on death of the annuitant is included in the actuarial loss on annuity obligations.
- rNot-for-Profit Entity A acquired and placed in service $1,500 of equipment for Program A; net assets with donor restrictions were available at the time the equipment was purchased.
- sNet investment return of $18,000 was earned from the pooled donor-restricted endowment. This comprised $12,000 of realized and unrealized net gains and $6,000 of interest and dividends. Additionally, $300 of interest and dividends was earned from separately invested donor-restricted endowment funds and annuity trust assets, which are required to be reinvested. The original endowment gift amount as adjusted to the level required by donor stipulations or by law that extends donor restrictions was $122,337.
- tNot-for-Profit Entity A reinvested the yield of $120 on a donor-restricted endowment fund that requires income to be added to the original gift until the fund's value is $2,500.
- uNot-for-Profit Entity A's governing board appropriated for current operations $7,500 of net assets with donor restrictions from the donor-restricted endowment fund. The full amount appropriated was reclassified to net assets without donor restrictions in the current year because the purpose restrictions on $3,000 of the appropriated amount were met in the current year and there were no purpose restrictions on the remaining $4,500.
- vNot-for-Profit Entity A follows an enacted version of UPMIFA.
- wNone of Not-for-Profit Entity A's endowment funds were underwater as of the date of the financial statements.
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