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NFP E is in the furtherance of its mission. [FAS 164, paragraph A107, sequence 208]

958-805-55-58 In this Example, the transaction was arranged primarily to achieve economic benefits favorable to the acquiree. Thus, that assistance would be an asset acquired at the acquisition date that is recognized as part of accounting for the acquisition. The cash assistance also is included in the acquisition accounting even though it is transferred to the resulting combined entity. The situation is accounted for the same as if the third-party donor had contributed the cash to NFP E before NFP F’s acquisition of NFP E. [FAS 164, paragraph A108, sequence 209]

  • >

    > Example 5: Acquiree Expected in the Combined Entity to Be

Predominantly Supported by Contributions and Returns on Investment

958-805-55-59 This Example illustrates one way in which a not-for-profit entity (NFP) might implement the requirements of paragraphs 958-805-25-29 and 958- 805-45-4. [FAS 164, paragraph A122, sequence 223.2] On February 10, 20X0, NFP G, a religious not-for-profit entity, purchases 100 percent of the ownership interests in Restaurant H for consideration of $525,000. On the acquisition date, the amount of the net identifiable assets of Restaurant H recognized and measured in accordance with this Subtopic was $410,000. NFP G acquired Restaurant H for the purpose of converting it to a soup kitchen. [FAS 164, paragraph A124, sequence 225]

958-805-55-60 Management of NFP G expects the soup kitchen resulting from the conversion of Restaurant H to be predominantly supported by contributions and returns on investments. Specifically, the operating costs of the soup kitchen are expected to be funded by NFP G’s existing contribution base. The following table illustrates how NFP G might satisfy the requirements of paragraph 958-805- 45-4 for presenting the separate charge to the statement of activities at the acquisition date. [FAS 164, paragraph A125, sequence 226.1]

NFP G Statement of Activities For the Year Ended December 31, 20X0 (presented in thousands)

Temporarily

Permanently

Unrestricted

Restricted

Restricted

Total

Revenue, gains, and other support Net assets released from restrictions

Total revenues, gains, and other support Expenses

$

8,640 5,820 14,460

(13,115)

$

6,510 (5,820)

690 -

$

280

- 280

-

$ 15,430 - 15,430 (13,115)

Change in net assets before changes related to acquisition of Restaurant H

1,345

690

280

2,315

Excess of consideration transferred over net assets acquired in acquisition of Restaurant H (Note X)

Change in net assets

$

(115) 1,230

$

- 690

$

-

(115)

280

$

2,200

[FAS 164, paragraph A125, sequence 226.2]

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