Questions and Answers of Modern Advanced Accounting

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
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
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
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
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
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
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
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
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 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
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
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
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 . . . . . . . . . . . . .
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
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
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
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
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
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
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.
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
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.
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
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
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
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
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
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
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
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.
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
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
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
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
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
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
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
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
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
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
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
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
A private not-for-profit entity has the following expenses for the current year.Research to cure disease . . . . . . . . . . . . . . . . .$60,000Fundraising costs . . . . . . . . . . . . . . . . . .
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
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
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
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
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
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
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
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
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.
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
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
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,
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
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.
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
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
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
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
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
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
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
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
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
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
The City of Pfeiffer starts the year of 2020 with the general fund and an enterprise fund. The general fund has two activities: education and parks/recreation. For convenience, assume that the
The City of Bernard starts the year of 2020 with the following unrestricted amounts in its general fund: cash of $20,000 and investments of $70,000. In addition, it holds a small building bought on
The following information pertains to the City of Williamson for 2020, its first year of legal existence. For convenience, assume that all transactions are for the general fund, which has three
The County of Maxnell decides to create a waste management department and offer its services to the public for a fee. As a result, county officials plan to account for this activity as an enterprise
A city government adds streetlights within its boundaries at a total cost of $300,000. These lights should burn for at least 10 years but can last significantly longer if maintained properly. The
On January 1, 2020, the City of Graf pays $60,000 for a work of art to display in the local library. The city will take appropriate measures to protect and preserve the piece. However, if the work is
On January 1, 2020, a rich citizen of the Town of Ristoni donates a painting valued at $300,000 to be displayed to the public in a government building. Although this painting meets the three criteria
The City of Lawrence opens a solid waste landfill in 2020 that is at 54 percent of capacity on December 31, 2020. City officials had initially anticipated closure costs of $2 million but later that
On January 1, 2020, the City of Hastings creates a solid waste landfill that it expects to reach capacity gradually over the next 20 years. If the landfill were to be closed at the current time,
The City of Raylan has a rather large warehouse that it no longer needs. The city had previously used the warehouse to store supplies and equipment for the school system, police department, and other
The City of Leonard decides to lease school desks for its school system rather than buy them because the lessor will do all scheduled maintenance. On January 1, 2020, the school system leases 5,000
Use the same information as in (8). What amount of deferred lease revenue will Reynolds report on its statement of net position as of December 31, 2020, assuming that the county recognizes revenue on

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