Question

he University of Danville is a private not-for-profit university that starts the current year with $764,000 in net assets: $431,000 unrestricted, $233,000 temporarily restricted, and $100,000 permanently restricted. The following transactions occur during the year. Charged students $1.90 million in tuition. Received a donation of investments that had cost the owner $101,000 but was worth $303,000 at the time of the gift. According to the gift’s terms, the university must hold the investments forever but can spend the dividends for any purpose. Any changes in the value of these securities must be held forever and cannot be spent. Received a cash donation of $743,000 that must be used to acquire laboratory equipment. Gave scholarships in the amount of $106,000 to students. Paid salary expenses of $333,000 in cash. Learned that a tenured faculty member is contributing his services in teaching for this year and will not accept his $90,000 salary. Spent $250,000 of the money in (c) on laboratory equipment (no time restriction is assumed on this equipment). Learned that at the end of the year, the investments in (b) are worth $360,000. Received dividends of $8,400 cash on the investments in (b). Computed depreciation expense for the period of $33,000. The school’s board of trustees decides to set aside $101,000 of previously unrestricted cash for the future purchase of library books. Received an unconditional promise of $11,000, which the school fully expects to collect in three years although its present value is only $8,000. The school assumes that the money cannot be used until the school receives it. Received an art object as a gift that is worth $82,000 and that qualifies as a work of art. The school prefers not to record this gift. Paid utilities and other general expenses of $237,000. Received free services from alumni who come to campus each week and put books on the shelves in the library. Over the course of the year, the school would have paid $105,000 to have this work done. Determine the end-of-year balances for unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets by completing the following statement of activities.

Answer 1

Ans- Preparing an appropriate statement of activities:-

University of Danville

Statement of Activities

		Unrestricted Net Assets	Temporarily Restricted Net Assets	Permanently Restricted Net Assets	Total
Revenue and Gains
Tuition	1,900,000
Scholarships	(106,000)	1,794,000			1,794,000
Unrealized Gain on Investments				57,000 (360,000-303,000)	57,000
Dividend Revenue		8,400			8,400
Contributions
Cash and Other Assets			751,000	350,000	1,101,000
Services		90,000			90,000
Total Revenues, Gains and Contributions		1,892,400	751,000	407,000	3,050,400
Net Assets Released from Restriction		250,000	(250,000)
Totals		2,142,400	501,000	407,000	3,050,400
Operating Expenses
Salaries		423,000			423,000
Depreciation		33,000			33,000
Utilities and Other Expenses		237,000			237,000
Total Expenses		693,000			693,000
Increase in Net Assets		1,449,400	501,000	407,000	2,357,400
Net Assets- Beginning of the Year		431,000	233,000	100,000	764,000
Net Assets- End of the Years		1,880,400	734,000	507,000	3,121,400