6. The Turtle Island Singers receive three gifts during the year 2012: (a) $3,000, which may be used for any purpose at any time; (b) $5,000, which must be used for a special concert in a nursing home; and (c) $1,000, which may be used for any purpose, but only in the year 2013. When it receives the gifts, how should the entity classify them?

a. $3,000 as unrestricted revenue and $6,000 as temporarily restricted revenue

b. $4,000 as unrestricted revenue and $5,000 as temporarily restricted revenue

c. $8,000 as unrestricted revenue and $1,000 as temporarily restricted revenue

d. $9,000 as unrestricted revenue

7. In response to a fund-raising campaign, an electric utility provides free electricity to a not-for-profit entity. How should the not-for-profit entity report this gift in its Statement of Activities?

a. It should not be reported in the statement.

b. It should not be reported on the face of the statement, but should be disclosed in the notes.

c. It should be reported at its fair value as both a revenue item and as an expense item.

8. A group of citizens donate their time to construct a building to provide shelter for the homeless, to be run by a not-for-profit entity. In this situation, what is the applicable accounting rule for recognizing the fair value of the services on the face of the financial statements?

a. donations that take a form other than cash should not be recognized.

b. the fair value of contributed services should not be recognized unless the services require specialized skills, are provided by individuals who have those skills, and which the entity would need to be purchased if not donated.

c. contributed services should be recognized at the fair value of the assets they create.

9. Jim Sanders, a local certified public accountant (CPA), donates a significant amount of his spare time to Beths Gallery, a not-for-profit museum. He donates 50 hours to audit the books and 80 hours selling products at the museum store. He charges his regular clients $200 an hour as a CPA. How should the Gallery report Mr. Sanderss donation of time?

a. report $26,000 (130 hours @ $200) as contribution revenue and expense

b. report $0 as contribution revenue and expense, and describe Mr. Sanders services to the museum in a note to the statements

c. report $10,000 (50 hours @ $200) as contribution revenue and expense

10. A not-for-profit arts organization receives a $300,000 gift from a donor who specifies that the gift must be maintained in perpetuity and that the income from the gift is to be used only to take disabled persons to the theater. How should the entity report the $300,000 gift in the net asset section of its statement of financial position?

a. as unrestricted

b. as temporarily restricted

c. as permanently restricted

11. A not-for-profit arts organization receives a $300,000 gift from a donor who specifies that the gift must be maintained in perpetuity, and the income from the gift is to be used only to take disabled persons to the theater. The entity derives $20,000 from investing the gift, but has not spent it by year-end. How should the entity report the $20,000 of resources in the net asset section of its statement of financial position?

a. as unrestricted

b. as temporarily restricted

c. as permanently restricted