1) At the beginning of 2020, a private NFP organization receives a donation of equipment with a fair value of $1,000,000 and an estimated useful life of 5 years, no residual value.

The donor puts no restrictions on the donation. What items appear in the 2020 statement of activities related to this donation?

A.Contributions revenue (increases net assets without donor restrictions) $1,000,000; expense (reduces net assets without donor restrictions) $200,000.

B.Contributions revenue (increases net assets without donor restrictions) $1,000,000; expense (reduces net assets with donor restrictions) $200,000.

C.Contributions revenue (increases net assets with donor restrictions) $1,000,000; net assets released from use restrictions (increases net assets without donor restrictions and reduces net assets with donor restrictions) $200,000; expense (reduces net assets without donor restrictions) $200,000.

D.Contributions revenue (increases net assets with donor restrictions) $1,000,000; expense (reduces net assets without donor restrictions) $200,000.

2) A CPA contributes services valued at $3,000 to provide financial services to a private NFP organization. The net effect of this contribution in the organization's statement of activities is:

A.Not reported in the statement of activities.

B.Increase in expenses and increase in contributions of $40,000; no net effect on net assets.

C.$40,000 increase in net assets without donor restrictions.

D.$40,000 increase in net assets with donor restrictions.

3) At the beginning of the current year, a donor gave the Fresno Rehabilitation Center, a private NFP organization, $100,000 in cash, with the provision that the cash be invested in income-producing securities. The center is to pay the donor $3,000 at the end of each year for his remaining life. Upon his death, remaining resources become available to the center with no restrictions as to use. The center invested the $100,000 in securities earning cash dividend and interest income of $3,500 in the current year. The securities have a fair value of $102,000 at the end of the year. The donor's life expectancy is 10 years, and the annual discount rate is 5%. The present value of $1/year for 10 years, discounted at 5%, is 7.7217.

The annuity payable, reported on the statement of net position for the current year-end, is

A.$25,665

B.$97,000

C.$76,835

D.$20,165

4) A donor contributed $100,000 in cash to Goodwill Industries in 2020. The donor specified that the contribution be held as a permanent endowment, and income from investment of the contribution be used for job training programs. Goodwill Industries invested the $100,000 in securities in 2020. During 2021, investment income of $3,000 was received in cash, and $2,500 was used for job training programs.

How does Goodwill Industries report this on its 2021 statement of activities?

A.$3,000 investment income increases net assets with donor restrictions; $3,000 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.

B.$3,000 investment income increases net assets without donor restrictions; $2,500 expense reduces net assets with donor restrictions.

C.$3,000 investment income increases net assets with donor restrictions; $2,500 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.

D.$3,000 investment income increases net assets without donor restrictions; $2,500 expense decreases net assets without donor restrictions.

5) What is an accurate statement regarding required NFP reporting of derivatives used to hedge forecasted transactions?

A.Similar to governments, NFPs can report changes in the value of derivatives used for hedging as deferred inflows/outflows on the balance sheet rather than reporting gains and losses on the operating statement.

B.Similar to businesses, NFPs can report changes in the value of derivatives used for hedging as adjustments to OCI rather than reporting gains and losses on the operating statement.

C.NFP reporting standards do not allow any special hedge accounting for hedges of forecasted transactions.

D.NFP organizations do not report unrealized gains and losses on hedge investments.