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Cash Contributions receivable Long-term investments Plant, property, and equipment

$

Total assets Accounts payable Mortgage Total liabilities Total net assets

$

75 225 500 430 1,230 (65) (165) (230) 1,000

Unrestricted net assets Temporarily restricted net assets Permanently restricted net assets

Total net assets

$

$

550 250 200 1,000

[FAS 164, paragraph A127, sequence 228.2]

958-805-55-65 Charity I recognizes a $1,000 contribution received in the acquisition (the excess of the acquisition date values of the identifiable assets acquired over the acquisition date values of the liabilities assumed). Charity I classifies the inherent contribution received according to the type of donor- imposed restrictions, including any imposed by the donor of the business or nonprofit activity acquired. [FAS 164, paragraph A128, sequence 229.1]

  • >

    > > Case A: The Inherent Contribution Is Not Subject to Additional

Restrictions

958-805-55-66 Based on donor restrictions on Charity J’s net assets at the acquisition date, net assets with a fair value of $250 and $200 were classified as temporarily restricted and permanently restricted net assets, respectively. In this Example, Charity J is, in effect, the donor of the acquired nonprofit activity, and it imposes no additional donor restrictions. To recognize the fiduciary responsibilities to the donors of Charity J that are assumed when Charity J’s assets and liabilities are acquired, Charity I would classify changes to its net assets as follows. [FAS 164, paragraph A128, sequence 229.2]

Increase in unrestricted net assets: Contribution received in the acquisition of Charity J

$ 550

Increase in temporarily restricted net assets: Contribution received in the acquisition of Charity J

$ 250

Increase in permanently restricted net assets: Contribution received in the acquisition of Charity J

$ 200

[FAS 164, paragraph A128, sequence 229.3]

  • >

    > > Case B: The Inherent Contribution Is Subject to Additional

Restrictions

958-805-55-67 Charity J is a subsidiary of Parent before the acquisition by Charity I. [FAS 164, paragraph A129, sequence 230] As a condition of the acquisition, Parent’s governing board requires that Charity I use $175 of unrestricted net assets for future capital improvements to the facility acquired.

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