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 Topic: Governmental -CPA-05209 ( Topic Closed)
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Xalina
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| Posted: 20 Sep 2009 at 15:12 | IP Logged
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During the current year, a voluntary health and welfare organization receives $300,000 in unrestricted pledges. Of this amount, $100,000 has been designated by donors for use next year to support operations. If 15% of the unrestricted pledges are expected to be uncollectible, what amount of unrestricted support should the organization recognize in its current-year financial statements?
a. $300,000
b. $270,000
c. $200,000
d. $170,0Answer
Choice "d" is correct. The unrestricted support, net of expected uncollectibles, recognized in the current year financial statements is $170,000. Although $300,000 was pledged, 15% are anticipated to be uncollectible and $100,000 is effectively temporarily restricted by the time restriction limiting the use of the funds to the following year. The $200,000 ($300,000 - $100,000) of unrestricted current year pledges, reduced by $30,000 (15% of $200,000) is $170,000 ($200,000 - $30,000).
Choice "a" is incorrect. This answer incorrectly includes the entire amount pledged and ignores the $30,000 estimate of uncollectibility.
Choice "b" is incorrect. This answer incorrectly includes the entire amount pledged for current year recognition as unrestricted but does subtract the $30,000 estimate of uncollectibility.
Choice "c" is incorrect. This answer includes only the unrestricted pledges but does subtract the estimate of uncollectibility.
My Question is: All Pledges have an implied time restriction and are therefore Temp restricted. No?
I seem to getting all the silly ones wrong. I did manage to score 86 on this section but this area still confuses me!!
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bryris
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| Posted: 20 Sep 2009 at 16:01 | IP Logged
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If not specifically restricted by the donor, a pledge is unrestricted. This question does seem strange in that it says that 300,000 is unrestricted, then goes on to say that 100,000 is donor restricted.
In the end though, 100,000 is no longer unrestricted. Thus, 200,000 is unrestricted, less the 15% collectible. Pledges are recorded at their fair value, accordingly, these numbers are netted and the answer is 170,000.
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Xalina
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| Posted: 20 Sep 2009 at 20:59 | IP Logged
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I'm still not quite clear on this.
See Pg F9-56. Why does the JE classify the revenue as Temp Restricted?
Thanks for replying. You are awesome!
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Becker all the way!
FAR- 10/09/09-88
AUD- 11/24/09-91
REG- 01/22/2010- 94
BEC- 03/01/2010-90
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bryris
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| Posted: 20 Sep 2009 at 22:42 | IP Logged
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I'm a Gleim user so can't refer to Becker stuff. What does it say?
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Xalina
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| Posted: 20 Sep 2009 at 23:18 | IP Logged
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oh sorry! Here is how its presented
Unrestricted Contributions
Unconditional promises to contribute in the future are reported as restricted support ( Implied time restriction), at Present value of the estimated future cash flows ....
The JE is
DR Pledge receivable
CR Allowance for doubtful accounts
CR Contributed Revenue-Temporarily restricted revenue
I hope I'm not wasting too much of your time..
__________________
Becker all the way!
FAR- 10/09/09-88
AUD- 11/24/09-91
REG- 01/22/2010- 94
BEC- 03/01/2010-90
I came, I saw, I calculated!
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