Gold Development (GD), a newly incorporated not-for-profit organization with a December 31 year-end, will offer low-rent housing services for people with low income.
GD reports to Logimex, a government agency that requires audited annual financial statements to be filed. Mr. Bilodeau, the project originator and administrator of GD, is not familiar with the preparation of financial statements.
GD received a non-repayable grant from Logimex in February 20X2 for the construction of an eight-storey apartment building. Construction began in April 20X2.
Residents will start to move into the apartment building between October and December 20X2, although it will not be entirely completed until the end of December 20X2. By December 20X2 all the apartments should be rented.
GD receives donations from companies and individuals in the region. It has received pledges from large, well- known companies for the next five years, and pledges from individuals for the current and next year. Pledge amounts have been set out in writing on forms signed by the donors.
For a nominal salary, Mr. Bilodeau manages the organization with the help of his wife and the local priest, both of whom are volunteers.
1. Explain to Mr. Bilodeau what is meant by “reporting on a restricted- fund accounting basis” according to the CICA Handbook.
2. Advise Mr. Bilodeau on the appropriate accounting for the above issues assuming that GD decides to report on a restricted-fund accounting basis.