Select the correct response for each of the following.
1. On January 2, 20X2, a not-for-profit botanical society received a gift of an exhaustible fixed asset with an estimated useful life of 10 years and no salvage value. The donor’s cost of this asset was $20,000, and its fair market value at the date of the gift was $30,000. What amount of depreciation of this asset should the society recognize in its 20X2 financial statements?
a. $3,000.
b. $2,500.
c. $2,000.
d. $0.

2. In 20X1, a not-for-profit trade association enrolled five new member companies, each of which was obligated to pay nonrefundable initiation fees of $1,000. The association received these fees in 20X1. Three of the new members paid the initiation fees in 20X1, and the other two paid them in 20X2. The association received from all members annual dues (excluding initiation fees) that have always covered the costs of services provided to members. Future dues can be reasonably expected to cover all costs of the organization’s future services to members. Average membership duration is 10 years because of mergers, attrition, and economic factors. What amount of initiation fees from these five new members should the association recognize as revenue in 20X1?
a. $5,000.
b. $3,000.
c. $500.
d. $0.

3. Roberts Foundation received a nonexpendable endowment of $500,000 in 20X3 from Multi Enterprise and invested it in publicly traded securities. Multi did not specify how gains and losses from dispositions of endowment assets were to be treated. No restrictions were placed on the use of dividends received and interest earned on fund resources. In 20X4, Roberts realized gains of $50,000 on sales of fund investments and received total interest and dividends of $40,000 on fund securities. The amount of these capital gains, interest, and dividends available for expenditure by Roberts’s unrestricted current fund is
a. $0.
b. $40,000.
c. $50,000.
d. $90,000.

4. In July 20X2, Ross donated $200,000 cash to a church with the stipulation that the revenue generated from this gift be paid to him during his lifetime. The conditions of this donation are that after Ross dies, the church may use the principal for any purpose voted on by its elders. The church received interest of $16,000 on the $200,000 for the year ended June 30, 20X3, and remitted the interest to Ross. In the church’s June 30, 20X3, annual financial statements should support
a. $200,000 as temporarily restricted net assets in the balance sheet.
b. $184,000 as revenue in the activity statement.
c. $216,000 as revenue in the activity statement.
d. Both a and c.

5. The following expenditures were among those a not-for-profit botanical society incurred during 20X4:
Printing of annual report ............... $15,000
Unsolicited merchandise sent to encourage contributions .. 35,000
What amount should be classified as fund-raising costs in the society’s activity statement?
a. $0.
b. $5,000.
c. $35,000.
d. $40,000.

6. Trees Forever, a community foundation, incurred $5,000 in expenses during 20X3 putting on its annual fund-raising talent show. In its statement of activities, Trees Forever should report the $5,000 as
a. A contra asset account.
b. A contra revenue account.
c. A reduction of fund-raising costs.
d. Part of fund-raising costs.

7. In 20X3, Burr Foundation’s board of trustees designated $100,000 from its current funds for college scholarships. Also in 20X3, the foundation received a bequest of $200,000 from the estate of a benefactor who specified that it be used for hiring teachers to tutor students with disabilities. What amount should be accounted for as temporarily restricted funds?
a. $0.
b. $100,000.
c. $200,000.
d. $300,000.

(The following information is for questions 8 through 10.)
United Together, a labor union, had the following receipts and expenses for the year ended December 31, 20X2:
Receipts:
Per capita dues $680,000
Initiation fees 90,000
Sales of organizational supplies 60,000
Nonexpendable gift restricted by donor for loan purposes for 10 years 30,000
Nonexpendable gift restricted by donor for loan purposes in perpetuity 25,000
Expenses:
Labor negotiations 500,000
Fund-Raising 100,000
Membership development 50,000
Administrative and general 200,000

The union’s constitution provides that 10 percent of the per capita dues be designated for the strike insurance fund to be distributed for strike relief at the discretion of the union’s executive board.

8. In United Together’s statement of activities for the year ended December 31, 20X2, what amount should it report under the classification of revenue from unrestricted funds?
a. $740,000.
b. $762,000.
c. $770,000.
d. $830,000.

9. In United Together’s statement of activities for the year ended December 31, 20X2, what amount should it report under the classification of program services?
a. $500,000.
b. $550,000.
c. $600,000.
d. $850,000.

10. In United Together’s statement of activities for the year ended December 31, 20X2, what amounts should it report under the classifications of temporarily and permanently restricted net assets?
a. $0 and $55,000, respectively.
b. $55,000 and $0, respectively.
c. $30,000 and $25,000, respectively.
d. $25,000 and $30,000, respectively.