- I would like to record about the key points of the US CPA exam content.
- with a financial interest in recipient organizations
- Evaluation of debt securities and equity securities
- Accounting Treatment When a Nonprofit Organization Receives Donations for Another Nonprofit Organization
- Classification Method for Gains and Losses on Investments Purchased with Donor-Restricted Endowment Assets in a Nongovernmental Not-for-Profit Organization
- The recognition of donation for users
I would like to record about the key points of the US CPA exam content.
<Create and note the points based on mainly Becker’s workbook>
with a financial interest in recipient organizations
- recognize the change in their interest of the recipient organization on their statement of activities. The interest in the net assets of the recipient is adjusted for the beneficiary’s share of the change with the following entry:
- (DR) Interest in net assets(PL) XX (CR) Interest in the company’s net asset
- In order for not-for-profit organizations to be financially interrelated as defined by FASB ASC 958-605, their relationship must share both characteristics: one organization must be able to influence the operating and financial decisions of the other and have an ongoing economic interest in the net assets of the other.
Evaluation of debt securities and equity securities
- All debt securities and those equity securities that have readily determinable fair values are measured at fair value in the statement of financial position. Gains and losses on investments are reported in the statement of activities. Investment income (e.g., dividends and interest) is reported in the period earned as an increase in net assets.
Accounting Treatment When a Nonprofit Organization Receives Donations for Another Nonprofit Organization
- Receiving the Donation: When Belle receives a donation from a donor intended for another nonprofit organization, it recognizes the amount as an asset (cash).
- Recognition of Liability: Simultaneously, it recognizes the same amount as a liability to the other nonprofit organization. This is because the company does not have discretion over the use of the funds received.
Classification Method for Gains and Losses on Investments Purchased with Donor-Restricted Endowment Assets in a Nongovernmental Not-for-Profit Organization
- When the donor has imposed restrictions for specific purposes: The earnings are used for the specified purposes, and the losses are also attributed to those purposes.
- When restrictions are set by law: The handling is done according to the legal provision.
The recognition of donation for users
- The Society received a donation from a philanthropist for the benefit of a specific beneficiary and the Society has no variance power (discretion) relative to the use of the contribution. Receipt of this cash is not a contribution received, it is a liability.
