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1. A private not-for-profit university charges its students tuition of $1.55 million. However, financial aid grants total $330,000. In addition, the school receives a $111,000

1. A private not-for-profit university charges its students tuition of $1.55 million. However, financial aid grants total $330,000. In addition, the school receives a $111,000 grant restricted for faculty salaries. Of this amount, it spent $41,000 appropriately this year. On the statement of activities, the school reports three categories: (1) revenues and support, (2) net assets reclassified, and (3) expenses. Which of the following is not true?

Unrestricted net assets shows the $330,000 as a direct reduction to the tuition revenue balance.

In the unrestricted net assets, the revenues and support should total $1.55 million.

Unrestricted net assets should recognize expenses of $41,000.

2. AB is a private not-for-profit entity. It acquires YZ, another private not-for-profit entity. The acquisition value is $1.07 million. YZ has net assets with a book value of $656,000 but a fair value of $763,000. Officials for AB expect that YZ will be predominantly supported by contributions in the future. After the acquisition, what amount of goodwill will be reported on the combined balance sheet?

$307,000.

$107,000.

$0.

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