Question
ou have recently been named the chief accountant for Stop Smog Now (SSN), a not-for-profit organization (NFPO) that provides pollution control devices for electricty-generating plants
ou have recently been named the chief accountant for Stop Smog Now (SSN), a not-for-profit organization (NFPO) that provides pollution control devices for electricty-generating plants in developing countries. SSN has relied entriely on a government grant for funding purposes and recently had its first fundraising drive to help cover an expansion. During Febuary and March 2016, the drive raised $400,000 in pledges to be collected evenly over the next 6 months (April - September)
SSN will continue to receive government funding of 300,000 per year for at least 5 more years. It also received a $50,000 contribution from the former accountant, who specified it be used to cover operating expenses of $10,000 per month for the next 5 months (Contribution recerived March 26, 2016)
You have been asked to clarify some accounting issues for members of the board of directors.
a, For their March 31, 2016 year end, how should they account for the outstanding pledges. Explain. WHen will the revenue be recognized
b, Assuming the Restricted Fund method is used, explain how SSN should account for the
i, $50,000 contribution
ii, $300,000 contribution
No JE required
c, The board is a bit confused on the question of whether they are a small or large NFPO. Advise them of the rule to determine this, and also provide them the options regarding accounting for capital assets if they remain a small NFPO
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