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ACCT 567 Temporarily Restricted Net Assets Case 14–1 For several years, Baytown Rehabilitative Camp for Disabled Children (hereafter referred to as…
ACCT 567 Temporarily Restricted Net Assets Case 14–1
Temporarily Restricted Net Assets – Baytown Rehabilitative Camp Case 14–1
Case 14–1 Temporarily Restricted Net Assets. For several years, Baytown Rehabilitative Camp for Disabled Children (hereafter referred to as the camp) has applied for an operating grant from the Baytown Area United Way. As the finance adviser for the local United Way allocation panel, it is your responsibility to evaluate the camp’s budget request for the forthcoming year and its audited financial statements. The camp’s most recent comparative statement of financial position and statement of activities are presented below.
Additional Information: As reflected in the camp’s 2011 statement of activities, the United Way agency allocated $25,000 to the camp for fiscal year 2011. However, the amount allocated was $5,000 less than the camp had requested in its fiscal year 2011 budget, reflecting the allocation panel’s concern about the camp’s inadequate financial reserves and low ratio of program services expense to total expense (only 57 percent in 2010). As a condition for receiving the $25,000 fiscal year 2011 allocation, Baytown Rehabilitative Camp agreed to take actions to improve its financial reserves and its ratio of program services expense to total expense, including an increase in its fund-raising efforts and a reduction in its support payroll.
Another area of concern to the allocation panel has been the camp’s long delay in using a restricted contribution of $100,000 received several years earlier. This gift was restricted by the donor for future expansion of a building used as a dining hall and for rehabilitative activities. This contribution has been invested in CDs and has grown to $122,368 as of December 31, 2010.
The camp is requesting a $35,000 United Way allocation for fiscal year 2012, based on a growing demand for its services and improvement made in its financial condition. As financial adviser for the local United Way allocation panel, however, you note that much of the improvement in unrestricted net assets resulted from $37,500 of temporarily restricted net assets that were released from restriction during fiscal year 2011, with no corresponding increase in the balance of the Buildings and Building Improvements account. (Note: $20,000 of the $57,500 released from restriction related to $20,000 of temporarily restricted contributions received during 2011.) You immediately contact the camp administrator for an explanation, whereupon she explains that the board of directors voted to use $37,500 of previously restricted investments for operating purposes after the administrator reported to the board that the original agreement with the donor could not be located and the donor was now deceased. She further indicated that the board may continue to use this pool of resources to further improve the camp’s financial condition.
Re: Analysis of Baytown Rehabilitative Camp for Disabled Children’s financial condition and recommendations for FY 2012 funding
As you and the members of the panel may recall, we were quite concerned…
Baytown Rehabilitative Camp, Homework, ACCT 567
ACCT 567 Case 14–1 Temporarily Restricted Net Assets Week 6 Keller
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