Multiple Choice. Choose the correct answer and explain why.

1. A conditional contribution would include:

a. A contribution with a donor-imposed requirement that the funds be used to purchase a fire truck

b. A contribution with a donor-imposed requirement that the funds not be used for five years

c. A contribution with a donor-imposed requirement that the funds would be donated only if the organization exceeded last years revenue by 20%

d. All the above

2. To be recognizable a promises to give (pledge) must be:

a. In writing

b. Unconditional

c. Supported by verifiable documentation

d. All the above

3. Mr. Conrad makes an unconditional promise to donate a painting to the ReSA Library on June 1, 20x3 for delivery on July 31, 20x3. His cost basis in the painting is P250,000 and the current market value of the painting is P500,000. The Library will record the donation as an asset and contribution revenue: a. On June 1, 2003 at P250,000

b. On June 1, 2003 at P500,000

c. On July 31, 2003 at P250,000

d. On July 31, 2003 at P500,000

e. Only a footnote disclosure would be recorded

4. Mr. Tamayo makes a P1,000,000 pledge to a NPOunder the condition that his fellowbuddies match his pledge within the next 90 days. At the time of the pledge, the beneficiary should record the donation at what amount:

a. P1,000,000 for Mr. Tamayo's pledge

b. P2,000,000 for Mr. Tamayo's pledge and the matching funds

c. P1,000,000 for Mr. Tamayo's pledge and a footnote for the matching funds

d. Only a footnote disclosure would be recorded

5. Contributed goods are recorded:

a. At fair market value when received

b. As a program expense when consumed

c. Footnoted only if it represents a material amount

d. Both a and b

Identification.

1. Question A donor contributed P1,000,000 in cash to the ReSA Red Cross in 20x3.The donor specified that the contribution be held as a permanent endowment, and income from related investments be used to help victims of typhoon.The ReSA Red Cross invested the P1,000,000 in securities in 20x3.During 20x4, dividend income of P50,000 was earned. How did the ReSA Red Cross report this on its 20x4 statement of activities?

2. At the beginning of 20x4, a private NFP organization receives a cash endowment of P5,000,000.The donor states that the organization must retain the endowment, and cash income on its investment must be used for specific program activities.The endowment is invested in securities.During 20x4, investment income is P100,000.The securities have a fair value of P5,500,000 at year-end.The organization has not spent any of the P100,000 by year-end.How is this information reported in the organization's statement of activities for 20x4?

3. In 20x2, a donor contributed common stock worth P500,000 to Habitat for Humanity, with the stipulation that the shares be retained intact, and any dividend income be used to support building projects in inner city neighborhoods in Tondo, Manila.The shares decline in value by P20,000 during 20x3.How is this reported on Habitat for Humanity's 20x3 statement of activities?

4. A hospital reports the following information: Estimated bad debtsnon-charity patients..............................P300,000 Estimated bad debtscharity patients...................................1,200,000 Contractual adjustmentsthird party payors............................ 900,000 Gross billings to non-charity patients....................................1,000,000 Gross billings to insurance companies and Medicare/Medicaid...... 5,000,000 Charity care, estimated retail value....................................... 1,200,000 Charity care, cost............................................................ 800,000 Net patient service revenue, as reported on the hospital's statement of activities, is: