Question $2(20$ marks$)$ Deferral and Restricted Fund Methods in Not$-$for$-$Profit Organizations

The Maple Tree Foundation $($MTF$)$ is a Canadian not$-$for$-$profit organization focused on supporting community development initiatives. MTF receives different types of contributions must account for them according to Canadian IFRS principles for not$-$for$-$profit organizations. MTF uses both the Deferral Method and the Restricted Fund Method for fund accounting.

Contribution Details:

Unrestricted Donation: MTF receives a $$50,000$ donation to support general operations with no restrictions on usage.

Government Grant: A $$100,000$ government grant is received, designated for a youth employment program. The grant is restricted to this program and must be spent within two years, or any unused portion must be returned.

Capital Donation: A $$200,000$ donation is provided to construct a new community center. Construction is expected to begin next year.

Required: Part A $(4$ marks$)$: Briefly explain the Deferral Method and the Restricted Fund Method of accounting for contributions in a not$-$for$-$profit organization.

Deferral Method

In this method, restricted funds related to expenses are deferred & recognized as revenue in the term where the related expenses ocunred.

stricted Fund Method

this method, the restricted funds are recognized as

mue.