[Andrew808]

Becker question and answer make no sense!

Q: What should be reported int he Year 11 year-end statement of financial position?

Facts: 100,000 CD maturing in Year 11, Interest Revenue Year 11 of 8,000, stipulation to be used to finance the ongoing salaries for a currently operating preschool program.

Answer: Unrestricted net assets 100,000
My answer: Net assets temporarily restricted – designated for preschool program salaes 8,000; unrestricted net assets 100,000

Incorrect because although the 100,000 would be displayed as unrestricted net assets, the 8,000 earnings from the investment are temporarily restricted by the donor, not designated by the NFP itself.

Why is the 8,000 not included on the Stmt of Financial Position as Temporarily Restricted? Is it due to my answer including the word “designated” which implies it was allocated as such by the NFP and not “stipulated” the donor?

If the answer I chose had only said “Temporarily Restricted Net Assets,” would my answer have been correct?

AUD - 76
BEC - 75
FAR - 80
REG - 77

scoring > 75 means I studied too hard, right?

[Andrew808]

follow up, my answer would be incorrect if I am incorrectly lumping in the interest revenue with the Net Assets “contributions” that are only attributable to funds received from donors upon the initial contribution that's considered “revenue” to the NFP (Becker study materials state that NFP “Revenue comes from contributions)

However, I think my confusion here is that I assumed the Interest Revenue should be included as a Temporarily Restricted Net Asset on the BS (in the form of cash received) because the entire amount of Temporarily Restricted Interest Revenue was not 100% expensed in the period. If there was excess Temporarily Restricted Interest Revenue received, would it be classified as a TR Net Asset on the BS below liabilities?

AUD - 76
BEC - 75
FAR - 80
REG - 77

scoring > 75 means I studied too hard, right?

[Andrew808]

Just came across another Becker question that stated the interest received, in accordance with the bequest, was used to finance ongoing program expenses in the following year.

The question asked what should be included as current assets on the current year classified balance sheet.

The answer “the earnings on the endowment is designated by the external donor for ongoing program expense. As such, it is unrestricted cash and a current asset.”

I'm lost, is there an exception to the rule for endowment funds that allow interest received to be classified as unrestricted? Or is it considered unrestricted because it is assumed that the donor stipulation is satisfied in continuously in the current year?

AUD - 76
BEC - 75
FAR - 80
REG - 77

scoring > 75 means I studied too hard, right?

[lam2848]

I think the 8,000 would also be considered unrestricted because the funds are meant to finance ongoing operations

FAR - 78

AUD - 75

BEC - 83

REG - 82

[Andrew808]

@lam2848 I think you are correct, it is considered unrestricted if used to fund ongoing PROGRAM costs, whereas Salaries is a General & Admin cost that would cause the interest to be Temporary restricted since it's funding a Support cost

AUD - 76
BEC - 75
FAR - 80
REG - 77

scoring > 75 means I studied too hard, right?

[Author]

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