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 Topic: NFP question ( Topic Closed)
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berry0331
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Joined: 04 Sep 2011
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Posts: 49
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| Posted: 09 May 2012 at 22:33 | IP Logged
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The correct answer is C.
Why does the remaining loss serve to reduce the expanses of $45,000.
Just thought they are both losses.
Question CPA-01216
A not-for-profit voluntary health and welfare organization received a
$500,000 permanent endowment. The donor stipulated that the income
must be used for a mental health program. The endowment fund reported
$60,000 net decrease in market value and $30,000 investment income.
The organization spent $45,000 on the mental health program during the
year. What amount of change in temporarily restricted net assets should
the organization report?
a. $75,000 decrease.
b. $15,000 decrease.
c. $0
d. $425,000 increase.
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divyagovil1
Major Contributor
Joined: 30 Jan 2009
Location: India
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Posts: 1456
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| Posted: 14 May 2012 at 00:51 | IP Logged
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The question asks about change in temporary restricted
net assets.
I would approach the question as follows:
Beg. Balance ; Increase Decrease & nbsp;
End Balance
Permanent Restricted 50 0,000 & nbsp;
Decrease: &nb sp; &nb sp; &nb
sp;
Mkt decrease 60,000 &nbs p; &nbs p; &nbs p;
less. Additional spent 45,000 & nbsp; &nbs p;
&nbs p;
Add. Investment income 30,000 0 ;
-75,000
Ending Balance ; ; ;
;
425,000
Temporary Restricted &n bsp; 0 & nbsp;
Add. Investment income &nbs p; 30,000 &nbs p;
less. Spent on mental health program ;
;
-30,000
Ending Balance ; ; ;
;
0
Unrestricted ; ; 0 ; 0 &nbs
p;
&nbs p;
0 ;0
All funds in this example are classified as either
Permanent or Temporary Restricted. You can always look at
the following points:
1) What is the ending balance of the Permanent Restricted
assets?
2) What is the Change in Permanent Restricted net assets?
3) What is the ending balance of the Unrestricted assets?
__________________
Divya - CO State
Passed using Becker Review :
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BEC - 05/30/09 - 86
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AUD - 11/21/09 - 92
Ethics - 2011
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