$14-10.$ Lafayette Film Center $($LFC$)$ is a not$-$for$-$profit theater that presents independent films. In addition to revenue from theater admissions, LFC relies on concession and caf$$ sales, grants and other external support, theater rental sales, and proceeds from special events and other programs that not only promote appreciation for independent films, but also generate grants and contributions. LFC$$s new executive director has asked you, as the director of finance, to provide an analysis of the organization$$s financial position.

Refer to Exhibits $14-7$ through $14-10$; these exhibits present LFC$$s statements of financial position, statements of activities, analysis of expenses by nature and function, and statements of cash flows for the years ended December $31,2024$ and $2023.$

Does LFC have an endowment? How do you know?

How much of LFC$$s net assets with donor restrictions were reclassified as unrestricted in $2024?$ Where can this be found in the statements of financial position and statements of activities?

Calculate the four profitability ratios presented in the chapter for LFC for $2024$ and $2023$ as well as the percent change in each from $2023$ to $2024.$ By which measure did LFC$$s profitability deteriorate the most, and by how much?

LFC$$s total expenses grew by over $100$ percent from $2023$ to $2024,$ while its total revenue and other support declined by over $50$ percent. Look at the theater$$s statements of activities to answer a and b:

Excluding interest$/$investment income and the one$-$time sale of tax credits, which three revenue or support categories declined by over $50$ percent from $2023$ to $2024?$

Which expense category grew by over $100$ percent?

Calculate LFC$$s program services ratio for $2024$ and $2023$ as well as the percent change in each from $2023$ to $2024.$ Is LFC$$s program services ratio for $2024$ higher than the commonly accepted benchmark?

Exhibit $14-7$

Lafayette Film Center Statements of Financial Position as of December $31,2024$ and $2023$

Assets

$2024$

$2023$

Current Assets

Cash and cash equivalents

$ $75,582$

$ $174,662$

Grants receivable

$562,696$

$137,858$

Inventory

$50,400$

$59,508$

Other receivables

$36,172$

$37,624$

Prepaid expenses

$11,552$

$$

Total Current Assets

$ $736,402$

$ $409,652$

Long$-$Term Assets

Conditional promises to give

$ $264,514$

$ $488,530$

Deposits

$1,510$

$7,910$

Property and equipment, net

$9,336,672$

$9,278,616$

Total Long$-$Term Assets

$ $9,602,696$

$ $9,775,056$

Total Assets

$$10,339,098$

$$10,184,708$

Liabilities and Net Assets

Current Liabilities

Accounts payable

$ $108,214$

$ $113,240$

Accrued expenses

$109,044$

$111,776$

Deferred revenue

$31,186$

$$

Line of credit

$960,510$

$100,000$

Current portion of capital lease obligations

$51,100$

$48,394$

Total Current Liabilities

$ $1,260,054$

$ $373,410$

Long$-$Term Liabilities:

Capital lease obligations less current portion

$36,596$

$88,638$

Total Liabilities

$ $1,296,650$

$ $462,048$

Net assets:

Without Donor Restrictions

$ $8,777,934$

$ $9,184,130$

With Donor Restrictions

$264,514$

$538,530$

Total Net Assets

$ $9,042,448$

$ $9,722,660$

Total Liabilities and Net Assets

$$10,339,098$

$$10,184,708$

The accompanying notes are an integral part of these statements.

Exhibit $14-8$

Lafayette Film Center Statements of Activities for the Years Ended December $31,2024$ and $2023$

Without Donor Restrictions

$2024$

$2023$

Revenue and Support

Theater admissions

$ $414,818$

$ $78,640$

Concession and caf$$ sales

$1,522,426$

$196,288$

Memberships

$139,684$

$61,350$

Theater rental sales

$68,180$

$58,414$

Special events

$47,710$

$140,616$

Other programs

$62,006$

$45,726$

Interest and investment income

$$

$56,656$

Sale of tax credits

$$

$1,384,002$

Grants

$1,061,762$

$3,016,550$

Contributions

$360,104$

$1,129,112$

Total Revenue and Support

$$3,676,690$

$$6,167,354$

Net assets released from restrictions

$274,016$

$1,826,578$

Total Revenue and Other Support

$$3,950,706$

$$7,993,932$

Expenses

Program services

$$3,640,634$

$$1,378,472$

General administration

$455,436$

$407,244$

Fund raising

$260,832$

$302,384$

Total Expenses

$$4,356,902$

$$2,088,100$

Change in Net Assets

$ $(406,196)$

$$5,905,832$

Net assets$$beginning of year

$9,184,130$

$3,278,298$

Net assets$$end of year

$$8,777,934$

$$9,184,130$

The accompanying notes are an integral part of these statements.

Given your answers to questions $4$ and $5,$ would you recommend that LFC reallocate some of its spending from program services to fundraising in $2025?$ Why or why not?

What was LFC$$s depreciation expense in $2023$ and $2024?$ Which financial statement$($s$)$ provide this information?

Now that receivables constitute a much larger proportion of LFC$$s assets than in the past, the execu