Question

Reporting Various Activities

Suppose the Institute of Management Accountants (IMA) has the following transactions during the year:

1. A retired CMA donates cash, with no stipulations as to use.

2. The IMA borrows money to finance construction of new facilities.

3. Money is collected in February from participants in the upcoming June annual conference.

4. The Board of Directors sets aside money for distribution to universities as awards for best management accounting doctoral dissertations.

5. Depreciation is recorded on IMA facilities.

6. Postretirement benefits are accrued for current employees.

7. A member’s dues, paid at the start of the membership period, expire.

8. A corporate partner contributes cash to finance promotion of the CMA certification program.

Required

Identify how each contribution is reported on the IMA’s statement of activities. The contribution either (a) increases or decreases net assets without donor restrictions, (b) increases or decreases net assets with donor restrictions, or (c) is not reported as a change in net assets.

Transaction	Reported on the IMA's statement of activities as:
1	Answer

2	Answer
3	Answer
4	Answer
5	Answer
6	Answer
7	Answer
8	Answer

Answer 1

Definition of Net Assets is aggregate of sum of all assets minus aggregate sum of all liabilities and losses.

Transaction	Reported on the IMA's Statement for Activities as
1. Retired CMA donates cash, with no stipulations as to use.	This results in the increase of net assets without the donor restriction, as the donation is a receipt and it is provided without any stipulations as to use.
2. The IMA borrows money to finance construction of new facilities.	This results in the no change in the net assets as it increases the liability (Short-term Loan/Long-Term Loan) and also increases the assets (Cash/Bank)
3. Money is collected in February from participants in the upcoming June annual conference.	This results in the no change in the net assets as it increases the liability (Receipts in Advance) and also increases the assets (Cash/Bank)
4. The Board of Directors sets aside money for distribution to universities as awards for best management accounting doctoral dissertations.	The funds earmarked for certain use doesn't affect the financial position and hence there is no change in the position of the net assets.
5. Depreciation is recorded on IMA facilities.	This results in the decrease of the Net Assets without any donor restriction as the depreciation is charged to the Asset evenly towards the end of its useful life. The Depreciation is debited as an Expenses and the Asset or Provision for Depreciation is credited.
6. Postretirement benefits are accrued for current employees.	This results in the decrease of Net assets without any Donor Restriction as it increases the long-term and short-term liabilities as recognised accordingly based on the actuarial valuation.
7. A member’s dues, paid at the start of the membership period, expire.	This doesn't affect the financial position as there won't be any change in the net assets of the financials.
8. A corporate partner contributes cash to finance promotion of the CMA certification program.	This result in the decrease in the net assets without any donor restrictions as the Institute has to pay for the promotion expenses as financed by corporate partner.