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modern advanced accounting
Advanced Accounting 14th Edition Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik - Solutions
An estate has the following income:Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The estate of Nancy Hanks reports the following information:Value of estate assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,400,000Conveyed to spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000Conveyed to children . . . . . . . . . . . . . . . . . . . . . . . . .
The executor of an estate is filing an income tax return for the current period. Revenues of $25,000 have been earned. Which of the following is not a deduction allowed in computing taxable income?a. Income distributed to a beneficiaryb. Funeral expensesc. A personal exemptiond. Charitable donations
Which of the following is not true concerning gift taxes?a. Gift taxes are not abolished but a lifetime exclusion of $11.4 million is available in 2019.b. The Tax Cuts and Jobs Act of 2017 will eventually eliminate the federal gift tax.c. Historically, gift taxes and estate taxes have been linked
M. Wilson Waltman died on January 1, 2019. All of his property was conveyed to beneficiaries on October 1, 2019. For federal estate tax purposes, the executor chose the alternate valuation date. On what date was the value of the property determined?a. January 1, 2019b. July 1, 2019c. October 1,
Sally Anne Williams died on January 1, 2019. All of her property was conveyed to several relatives on April 1, 2019. For federal estate tax purposes, the executor chose the alternate valuation date. On what date was the value of the property determined?a. January 1, 2019b. April 1, 2019c. July 1,
The following unmarried individuals died in 2019. The estate of John Lexington has a taxable value of $4,590,000. The estate of Dorothy Alexander has a taxable value of $6.9 million. The estate of Scotty Fitzgerald has a taxable value of $11.6 million. None of these individuals made any taxable
Which of the following is true concerning the Tax Cuts and Jobs Act of 2017?a. This tax law leads to the immediate elimination of the federal estate tax.b. This tax law leads to the immediate elimination of the federal gift tax.c. This tax law provides for an $11.4 million tax-free exemption, as a
What was the impact of the Tax Cuts and Jobs Act of 2017 on the conveyance of property?
At what value are the assets within an estate reported?
Distinguish between testate and intestate.
A local private not-for-profit health care entity (Rochester Medical) incurred the following transactions during the current year. Record each of these transactions in appropriate journal entry form. Prepare a schedule calculating the change in net assets without donor restrictions and net assets
Under Lennon Hospital’s standard rate structure, it earned $9 million in revenues for the year ended December 31, 2020. However, Lennon did not expect to collect this entire amount because officials deemed $1.5 million to be charity care. Of the remainder, 90 percent was for patients who had
The following questions concern the appropriate accounting for a private not-for-profit health care entity. Write complete answers for each of these independent questions.a. What is a third-party payor, and how does the presence of third-party payors impact the financial reporting of a health care
Assume that Charity A and Charity B are alike in every possible way except as described next. Assume that each question is independent of the other questions.a. Each charity suffers significant damage from a hailstorm this year. Each hires a person to repair this damage. Each of these workers
Help & Save is a private not-for-profit entity that operates in Kansas. Swim For Safety is a private not-for-profit entity that operates in Missouri. The leaders of these two organizations have decided to combine forces on January 1, 2020, in order to have a bigger impact from their work. They
For a number of years, a private not-for-profit entity has been preparing financial statements that do not necessarily conform to U.S. generally accepted accounting principles. At the end of the most recent year (Year 2), those financial statements show total assets of $900,000, total liabilities
The Watson Foundation, a private not-for-profit entity, starts 2020 with cash of $100,000, contributions receivable (net) of $200,000, investments of $300,000, and land, buildings, and equipment (net) of $200,000. Net assets without donor restrictions were reported as $400,000, the same figure as
You are preparing a statement of activities for the University of Richland, a private not-for-profit entity. The following questions should be viewed as independent of each other.Part IDuring the current year, a donor gives $400,000 cash to the school and stipulates that the money must be held
The College of Central North (a small private not-for-profit entity) has the following events and transactions.a. On January 1, Year 1, the board of trustees votes to restrict $1.9 million of previously unrestricted investments to construct a new football stadium at some future point in time.b. On
The University of Danville is a private not-for-profit university that starts the current year with $700,000 in net assets: $400,000 without donor restrictions and $300,000 with donor restrictions. The $300,000 is composed of $200,000 with purpose restrictions and $100,000 that must be held
The following questions concern the accounting principles and procedures applicable to a private not-for-profit entity. Write answers to each question.a. What is the difference between exchange revenue and contributed revenue?b. What is the significance of the statement of functional expenses?c.
The Willson Center is a private not-for-profit entity. During 2020, it receives pledges of $600,000 that it expects to collect during 2021. Of that amount, 10 percent is viewed as conditional. Of the rest, $300,000 must be used for automotive equipment for the NFP. In addition, $50,000 is set aside
A private not-for-profit entity is working to create a cure for a disease. The charity starts the year with one asset, cash of $700,000. Net assets without donor restrictions are $400,000. Net assets with donor restrictions are $300,000. Of the restricted net assets, $160,000 is to be held and used
During the year ended December 31, 2020, Andersen Hospital (operated as a private not-for-profit entity) received and incurred the following:Fair value of donated medicines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,000Fair value of donated services
Shirly Ngo spends four days in a local private not-for-private hospital. The hospital charges her $140,000 for the services. Her insurance company has contracts with the hospital that will lower the amount that has to be paid. The hospital believes it has a 70 percent chance that the reduction will
Mike Jones spends five days in a local private not-for-profit hospital. The hospital charges him $170,000 for the services. His insurance company has contracts with the hospital that will lower the amount that has to be paid. The hospital believes it has a 60 percent chance that the reduction will
Which of the following is not true about the application of new revenue recognition rules to private not-for-profit health care entities?a. Revenues are likely to be much lower than under previous rules.b. Bad debts will be recorded as direct reductions to revenue rather than as a separate
A health care entity provides services to a patient. Those services have a standard charge of $76,000. The insurance company that represents the patient has a contract with the entity that leads to a $20,000 reduction in that charge. That reduction is referred to by which of the following labels?a.
Which of the following are unique to the reporting of revenue by a health care entity?a. Charity care must be reported even if the entity does not anticipate seeking collection.b. The patients pay for little of the services, and significant discounts are common.c. Reported bad debt expenses will
Many companies make annual reports available on their corporate website. Annual reports on Form 10-K also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filing Type, search for 10-K).Access the most recent annual report for a U.S.-based multinational company with which you
Belwood College is a private not-for-profit institution that has tax-exempt status. Which of the following is most likely to be the specific tax-exempt status that Belwood College holds?a. 501(c)(3)b. 501(c)(4)c. 501(c)(5)d. 501(c)(6)
Which of these forms must most tax-exempt organizations file annually with the Internal Revenue Service?a. 990b. 1203c. 501d. 501(c)(3)
A private not-for-profit hospital provides services for patients without any health insurance. The standard charge for individuals with some ability to pay is $700,000. The standard charge for individuals with no ability to pay is $300,000. How will the hospital report these two different groups of
A private not-for-profit health care entity charges patients $4 million that will be covered by various government programs. These programs are entitled to $1.9 million in explicit price concessions. The health care entity believes it has a 60 percent chance of receiving the net amount but a 40
BC and OP are both private not-for-profit entities. They combine to create LM, a new private not-for-profit entity with an entirely new board of directors. BC holds land with a book value of $300,000 and a fair value of $400,000. OP holds land with a book value of $500,000 and a fair value of
In the reporting of a private not-for-profit health care entity, officials are allowed to apply a portfolio approach. What is meant by a portfolio approach?
AB is a private not-for-profit entity. It acquires YZ, another private not-for-profit entity. The acquisition price is $1 million. YZ has net assets with a net book value of $600,000 but a fair value of $700,000. Officials for AB expect that the primary support for YZ in the future will be
A private not-for-profit entity applies for and receives status as a 501(c)(3) organization. What is the importance of this tax-exempt status?
A local private not-for-profit entity receives a large monetary pledge. Accountants are attempting to determine if the contribution is conditional. They are assessing the possible existence of a barrier that has to be overcome. Which of the following is not an indication of a barrier of this
Helping Hand NFP is a private not-for-profit entity that has equipment with a net book value of $1.1 million but a fair value of $1.4 million. Fancy Fingers NFP is also a private not-for-profit entity that has equipment with a net book value of $1.0 million but a fair value of $1.2 million. If
Sunshine NFP, a private not-for-profit entity, gains control over Dancing Ducks NFP, another not-for-profit entity. The acquisition price is $2.5 million although the identifiable assets and liabilities of Dancing Ducks only have a total net fair value of $2.2 million. What recording is made of the
The Houston Corporation signs a formal pledge to give $100,000 in cash to a private not-for-profit entity within the next year. The money must be spent to upgrade important equipment used by the charity. The pledge is judged to be a conditional contribution. Which of the following is recorded by
The Stanton Company conveys $23,000 in cash to a private not-for-profit entity. The money must be used for a designated purpose. This conveyance is viewed as a conditional contribution. Which of the following is recorded by the private not-for-profit entity?a. A liabilityb. No journal entry is
What are the two methods that can be used to account for the combination of two or more private not-for-profit entities into a single entity?
The Peyton Corporation conveys $60,000 in cash to a private not-for-profit entity. It is viewed as a conditional contribution. Which of the following is most likely to be true about this donation?a. It has been restricted for use in a future period of time.b. The agreement requires the NFP to
A donor conveys a gift to a charity that is to be conveyed to a separate beneficiary. What is the method of reporting for each party if this charity is given variance powers that enable it to change the beneficiary?
A donor gives Charity One $50,000 in cash with the instructions to convey the money to Charity Two. According to the agreement, the donor can reconsider and revoke the gift at any time prior to its transfer to Charity Two. Which of the following statements is true?a. Charity One should report a
Pel Museum is a private not-for-profit entity. If it receives a contribution of historical artifacts, it need not report the contribution if the artifacts are to be sold and it will use the proceeds toa. Support general museum activities.b. Acquire other items for the museum’s collections.c.
A donor conveys a gift to a charity that is to be conveyed to a separate beneficiary. What is the normal method for each party to report this transfer?
A not-for-profit museum receives a painting by Monet valued at $750,000. The museum chose not to report the painting on its financial statements. What are the rules for such reporting?
The Jones family lost its home in a fire during December 2020. On December 25, 2020, a philanthropist sent money to the Amer Benevolent Society, a private not-for-profit entity, specifically to be conveyed to the Jones family to help them recover. The money was conveyed in January 2021. How should
A not-for-profit entity reports contributed services valued at $38,000. How was the decision made to report these services?
A private not-for-profit entity receives $32,000 in cash from solicitations made in the local community. The charity receives an additional $1,500 from members in payment of their annual dues. These members receive benefits of commensurate value to the amount paid as dues. How should these receipts
What is an in-kind donation? How are in-kind donations reported?
A group of high school seniors perform volunteer services for patients at a nearby assisted-living facility, a private not-for-profit entity. The assisted-living facility would not otherwise provide these services such as wheeling patients in the park or calling games of bingo. At a minimum-wage
A not-for-profit entity receives a pledge for $50,000, money that must be used for a stipulated purpose. How is the pledge reported if it is judged to be unconditional? How is the pledge reported if it is judged to be conditional?
George H. Ruth takes a leave of absence from his job to work full time for a charity for six months. Ruth fills the position of finance director, a position that normally pays $88,000 per year. Ruth accepts no remuneration for his work. What recording does the charity make?a. As contribution
The accountant for a not-for-profit entity is trying to determine whether a gift is conditional. How is that decision made?
A private not-for-profit entity receives a gift of new furniture from a retail department store. The furniture has a fair value of $2,100. The entity holds the furniture for several weeks. After a flood, the entity gives the furniture to several needy families. How should the NFP entity record
A private not-for-profit entity has the following activities performed by volunteers who work at no charge. In which case should no contribution be reported?a. A carpenter builds a porch on the back of one building so that patients can sit outside.b. An accountant does the organization’s
A private not-for-profit entity sends a mailing to all of its current and former members regardless of whether they have ever donated money or not. The mailing has a total cost of $22,000. It asks for monetary contributions to help achieve the charity’s stated mission. In addition, 80 percent of
A private not-for-profit entity spends $100,000 to send a mailing that solicits donations and provides educational and other information about the charity. Which of the following is true?a. No part of the $100,000 can be reported as a program service expense.b. Some part of the $100,000 must be
A private not-for-profit entity has the following expenses for the current year.Research to cure disease . . . . . . . . . . . . . . . . .$60,000Fundraising costs . . . . . . . . . . . . . . . . . . . . . . . . 70,000Work to help individuals with disabilities . . . . 40,000Administrative salaries .
Which of the following statements about the reporting of functional expenses is not true?a. A statement of functional expenses is now required of all private not-for-profit entities.b. Functional expenses are divided between program services and supporting services.c. Functional expenses can be
A private not-for-profit university charges student tuition of $1 million for the current year. Financial aid grants total $220,000. The school also receives a $100,000 grant restricted for faculty salaries. Of that amount, $30,000 is spent appropriately this year. In preparing a statement of
A private not-for-profit entity receives three large cash donations:∙ One gift of $70,000 is restricted by the donor so that it cannot be spent for four years.∙ One gift of $90,000 is restricted to pay the salaries of the entity’s workers.∙ One gift of $120,000 must be held forever with the
Go to https://independentsector.org/resource/principles/. Click on “Principles Guide for Good Governance and Ethical Practice.” Read through the 33 Principles to be followed. Focus on the explanation for the six principles under the heading of Strong Financial Oversight. Write a short report on
The governing board of a private not-for-profit entity votes to set $400,000 in cash aside in an investment fund so that this money and future interest will be available in five years, when a new building is scheduled for construction. Which of the following is not true?a. The investments are
Go to https://about.usc.edu/files/2017/12/USC-Financial-Report-2017.pdf to find the 2017 financial statements for the University of Southern California.RequiredThe financial statements for the University begin on page 11. Use those financial statements and the accompanying notes to answer each of
In Year 6, a donor gives $112,000 to a private not-for-profit entity to enable it to pay the salary of a new doctor to be hired by the organization. Near the end of Year 7, this money is used for the stipulated purpose. Which of the following is true about the statement of activities for Year 7?a.
Go to the website of a private voluntary health and welfare entity such as United Cerebral Palsy (www.ucp.org), the American Heart Association (www.heart.org), or the American Cancer Society (www.cancer.org). Find the charity’s latest financial statements, which usually can be found by clicking
In Year 6, a donor gives $112,000 to a private not-for-profit entity to enable it to buy a new bus for transportation purposes. Near the end of Year 7, this money is used for the stipulated purpose. The donor made no provisions about the accounting for this acquisition. Which of the following is
Why is a private not-for-profit entity more likely to use the direct method of reporting operating activity cash flows than a for-profit business would be?a. The direct method is the traditional approach for private not-for-profit entities.b. An indirect method reconciliation does not have to be
Go to the website www.guidestar.org and enter the name of a private not-for-profit organization. Considerable information will be available about the entity. By registering, it should be possible to find a link to the Form 990 (Return of Organization Exempt from Income Tax) filed with the Internal
What are the three types of restricted net assets?a. Current, noncurrent, structuralb. Purpose, time, permanentc. Immediate, longer than one year, longer than five yearsd. Monetary, nonmonetary, leveraged
Go to www.charitynavigator.org and scroll down until you find “Rating Methodology.” Read the information that is provided and write a short memo to explain how this organization rates charities.
A statement of financial position shows account balances in two separate columns. How are those columns labeled?a. Current and noncurrentb. Temporary and permanentc. Without donor restrictions and with donor restrictionsd. Contributed funds and funds from exchange transactions
The financial reporting for private not-for-profit entities primarily focuses ona. Basic information for the organization as a wholeb. Standardization of the fund information that is reportedc. Inherent differences of various not-for-profit entities that impact reporting presentationsd.
Earlier this year, Alltime Company (headquartered in Kansas City, Missouri) acquired a small watch manufacturer in Berlin, Germany, that keeps its books in euros. (This is the first foreign direct investment made by Alltime.) The end of the fiscal year is approaching, and the company’s CFO is
A not-for-profit entity receives $20,000 as a donation. They money must be spent for a stipulated purpose. How does the reporting differ based on whether the gift is unconditional or conditional?
How does the reporting of a statement of cash flows by a not-for-profit entity differ from the reporting by a for-profit business?
A donor gives $10,000 to a not-for-profit entity to be used to pay for a new piece of equipment with a 10-year life. Subsequently, the money is properly spent. How is the expenditure reported?
A donor gives $10,000 to a not-for-profit entity to be used to pay the salary of a new administrator. Subsequently, the money is properly spent. How is the expenditure reported?
Wilson Helps is a not-for-profit entity that has exchange transactions but also receives donor contributions. How can the entity’s accountant differentiate the exchange transactions from the contributions?
What disclosure is necessary to describe the liquidity position of a not-for-profit entity? Why is this disclosure viewed as significant to readers of the financial statements?
What are board-designated funds, and how are they reported?
What ratio is frequently used to assess the efficiency of not-for-profit entities?
In reporting the functional expenses of a not-for-profit entity, what are the two general types of expenses? How can functional expenses be reported?
What are net assets with donor restrictions?
What are net assets without donor restrictions?
What information do financial statement users want to know about a not-for-profit entity?
Prior to the creation of government-wide financial statements, the City of Loveland did not report the cost of its infrastructure assets. Now city officials are attempting to determine reported values for major infrastructure assets that were obtained prior to the preparation of these statements.
Read the following articles and any other papers that are available on setting governmental accounting standards:“The Governmental Accounting Standards Board: Factors Influencing Its Operation and Initial Technical Agenda,” Government Accountants Journal, Spring 2000.“Governmental Accounting
Officials for the City of Anderson, West Virginia, have recently formed a transit authority to create a public transportation system for the community. These same officials are now preparing the city’s CAFR for the most recent year. The transit authority has already lost a considerable amount of
The accountant for the City of Abernethy calls the local CPA firm that audits the city’s financial statements with a question. “At the start of the current year, city officials signed a contract to lease a new police car for seven years, its entire useful life. We drove a hard bargain. The
A city starts a public library that has separate incorporation and receives some of its operating money from the state and some from private donations. Indicate whether each of the following independent statements is true or false, and briefly explain each answer.a. If the city appoints nine of the
A city maintains a solid waste landfill that was 12 percent filled at the end of Year 1 and 26 percent filled at the end of Year 2. During those periods, the government estimated that total closure costs would be $2 million. It pays $50,000 to an environmental company on July 1 of each of these two
On the first day of the year, the City of Wolfe buys $20,000 of equipment with a five-year life and no residual value for its school system. This cost was capitalized. No other entries were ever made. The city maintained the equipment using the modified approach.a. Based on the information
Use the information in problem 44 to prepare the 2020 fund financial statements for (a) the governmental funds and (b) the proprietary funds. A statement of cash flows is not required. Assume the city defines “available” as within 60 days and that all funds qualify as major. Assume that major
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