Chapter 16

Problem I
(1) a Recognized in period received.
(2) b Recognized in period received. Restriction is released when expenses are incurred.
(3) a Recognized in period made.
(4) a Recorded at present value at time promise to give is received.
(5) c Endowment principal cannot be spent. Earnings are unrestricted.
(6) b Recognized in period received. Restriction released either (1) when asset is placed in service or (2)
over its useful life.
(7) f Recognized when conditions are met.
(8) a Recorded at fair value when received.
(9) a Donated services of a skilled nature that would otherwise be purchased.
(10) f Not skilled services. May be foot noted.
(11) b Recognized in period received. Restriction is released when time restriction is satisfied.
(12) b Recognized in period received. Restriction is released when expenses are incurred.
(13) d Recognized revenue as expenses are incurred for research project.
(14) b Recognized in period received. Restriction is released either (1) when asset is placed in service or (2)
over useful life of asset.
(15) a, b, or f (If collection is displayed to the public or otherwise held for exhibit, the university is not required
to recognize contributions as revenue.)

Problem II
(a) Cash.............................................................................................................. 200,000
Revenues—Temporarily Restricted Contributions............................... 200,000

(b) Expenses....................................................................................................... 110,000

Cash....................................................................................................... 110,000

Reclassifications Out—Temporarily Restricted—

Satisfaction of Program Restrictions..................................................... 110,000
Reclassifications In—Unrestricted—
Satisfaction of Program Restrictions....................................... 110,000

(c) Reclassifications Out—Temporarily Restricted—

Satisfaction of Program Restrictions..................................................... 90,000
Reclassifications In—Permanently Restricted—
Satisfaction of Program Restrictions....................................... 90,000

Permanently Restricted Net Assets—Mandatory

Transfer-Out.......................................................................................... 90,000
Due to Endowment Fund................................................................ 90,000

Note to Instructor: The following entry would be made in the endowment fund:

Due from Restricted Current Fund............................................................... 90,000

Permanently Restricted Net Assets—Mandatory
Transfer-In...................................................................................... 90,000

(d) Cash.............................................................................................................. 15,000

Revenues—Temporarily Restricted Contributions............................... 15,000
Problem III
(1) Journal entries:
(a) Cash................................................................................................................ 20,000,000
 Bonds Payable.........................................................................................
20,000,000
Cash................................................................................................................ 5,000,000
Revenues—Temporarily Restricted Contributions................................. 5,000,000

(b) Construction in Progress................................................................................. 7,000,000

Cash......................................................................................................... 7,000,000

(c) Expenses—Operation and Maintenance of Plant

(Interest Expense).................................................................................... 800,000
Cash.................................................................................................. 800,000

(d) Building........................................................................................25,000,000
Construction in Progress......................................................................... 7,000,000
Cash.........................................................................................................
16,000,000
Retained Percentage—Liability to Contractor........................................ 2,000,000
Reclassifications Out—Temporarily Restricted—Satisfaction of
Plant Restrictions..................................................................................... 5,000,000
Reclassifications In—Unrestricted—Satisfaction of Plant
Restrictions................................................................................. 5,000,000

(e) Mortgage Payable........................................................................................... 2,000,000

Expenses—Operation and Maintenance of Plant
(Interest Expense).................................................................................... 800,000
Cash.................................................................................................. 2,800,000

(f) Land................................................................................................................ 200,000

Building.............................................................................................350,000
Mortgage Payable.................................................................................... 90,000
Revenues—Unrestricted Contributions................................................... 460,000

(g) Contributions Receivable............................................................................... 200,000

Revenues—Temporarily Restricted Contributions................................. 200,000
Expenses—Institutional Support (Provision for Uncollectible
Contributions).......................................................................................... 20,000
Allowance for Uncollectible Contributions..................................... 20,000
(h) Investments..................................................................................................... 500,000
Revenues—Temporarily Restricted Contributions................................. 500,000

(i) Cash................................................................................................................ 10,000

Revenues—Temporarily Restricted Investment Income........................ 10,000

(j) Expenses—Operation and Maintenance of Plant

(Depreciation Expense)........................................................................... 25,000
Accumulated Depreciation............................................................... 25,000

(2) USLS Private University

Statement of Activities
For Period Ended June 30, 20xx
Temporarily Permanently
Unrestricted Restricted Restricted Total

Changes in net assets:

 Revenues and gains:
Contributions........................................................... P 460,000
P 5,700,000................................................................. P6,160,000
Other investment earnings...................................... 0 10,000
10,000
Total unrestricted revenues and gains............... P 460,000
P 5,710,000..............................................................P 0 P6,170,000
Net assets released from restrictions:
Satisfaction of plant acquisition restrictions................ 5,000,000
(5,000,000)*............................................................ 0
Total revenues and gains and other support............ P5,460,000P710,000 P 0 P6,170,000
Expenses:
Operations and maintenance of plant........................... P1,625,000
........................................................................... P1,625,000
Institutional support...................................................... 20,000
........................................................................... 20,000
Total expenses......................................................... P1,645,000
P 0 P.......................................................................0 P1,645,000
Increase (decrease) in net assets..................... P3,815,000
P 710,000.................................................................P 0 P4,525,000

*Note to Instructor: The reclassification amount would total P25,000 if USLS’s policy is to release the restrictions
over the life of the assets rather than when placed into operation.

Problem IV
(1) (a) Cash................................................................................................................ 90,000
Revenues—Temporarily Restricted Contributions................................. 45,000
Revenues—Permanently Restricted Contributions................................. 45,000
Endowment Investments................................................................................ 45,000
Cash......................................................................................................... 45,000

(b) Cash................................................................................................................ 1,686,000

Accounts Receivable...................................................................................... 148,000
Deferred Revenues......................................................................................... 66,000
Revenues—Student Tuition and Fees..................................................... 1,900,000
Cash................................................................................................................ 158,000
Deferred Revenues.................................................................................. 158,000

(c) Cash................................................................................................................ 308,000

Allowance for Uncollectible Tuition and Fees............................................... 12,000
Accounts Receivable............................................................................... 320,000
Expenses—Institutional Support (Provision for Uncollectible
Tuition and Fees)..................................................................................... 9,000
Allowance for Uncollectible Tuition and Fees................................ 9,000
(d) Cash................................................................................................................ 6,000
Revenues—Unrestricted Investment Income.......................................... 6,000

(e) Cash................................................................................................................ 75,000

State Appropriations Receivable............................................................. 75,000
State Appropriations Receivable.................................................................... 40,000
Revenues—State Government Appropriations....................................... 40,000
 (f) Cash................................................................................................................ 30,000
Revenues—Temporarily Restricted Contributions................................. 30,000

(g) Cash................................................................................................................ 24,000

Investments.............................................................................................. 21,000
Revenues—Temporarily Restricted Gain on the Sale of
Investments...................................................................................... 1,100
Revenues—Temporarily Restricted Investment Income........................ 1,900
(h) Expenses—Instruction.................................................................................... 500,000
Expenses—Research...................................................................................... 400,000
Expenses—Institutional Support.................................................................... 100,000
Expenses—Student Aid.................................................................................. 100,000
Expenses—Student Services.......................................................................... 200,000
Expenses—Operation and Maintenance of Plant........................................... 500,000
Accounts Payable.................................................................................... 60,000
Cash......................................................................................................... 1,740,000

(i) Expenses—Research...................................................................................... 13,000

Cash......................................................................................................... 13,000
Reclassifications Out—Temporarily Restricted—Satisfaction
of Program Restrictions........................................................................... 13,000
Reclassifications In—Unrestricted—Satisfaction of
Program Restrictions.................................................................. 13,000

(j) Accounts Payable........................................................................................... 40,000

Cash......................................................................................................... 40,000

(k) Cash................................................................................................................ 7,000

Revenues—Temporarily Restricted Endowment Income....................... 7,000

(l) Cash................................................................................................................ 16,000

Pledges Receivable......................................................................................... 14,000
Revenues—Unrestricted Contributions................................................... 30,000
Expenses—Institutional Support Provision for Uncollectible
Contributions........................................................................................... 2,000
Allowance for Uncollectible Contributions..................................... 2,000

(2) USJR Private University

Statement of Activities
For Year Ended June 30, 20x9
Temporarily Permanently
Unrestricted Restricted Restricted Total

Changes in net assets:

Revenues and gains:
Tuition and fees........................................................ P1,900,000
P1,900,000
Contributions............................................................ 30,000 P 75,000 P45,000
150,000
Government appropriations, grants, and
contracts.............................................................. 40,000 40,000
Endowment income.................................................. 7,000 7,000
 Net realized gains on investments............................ 1,100 1,100
Other investment income.......................................... 6,000 1,900
7,900
Total revenues and gains..................................... P1,976,000
P 85,000..........................................................P45,000 P2,106,000
Net assets released from restrictions:
Satisfaction of program restrictions............................... 13,000 (13,000) 0
Total revenues and gains and other support................... P1,989,000
.....................................................................P 72,000 P45,000P2,106,000

Expenses and losses:

Instruction...................................................................... P 500,000 P
500,000
Research ...........................................................413,000 413,000
Institutional support....................................................... 111,000 111,000
Student aid...................................................................... 100,000 100,000
Operation and maintenance of plant.............................. 500,000 500,000
Student services.............................................................. 200,000
200,000
Total expenses and losses......................................... P1,824,000
P 0 P.........................................................................0 P1,824,000
Increase (decrease) in net assets..................................... P 165,000 P 72,000 P45,000
P 282,000
Net assets at beginning of year.............................................. 487,000 40,000 50,000
577,000
Net assets at end of year........................................................ P 652,000 P112,000 P95,000
P 859,000

Problem V
(1) Patient service revenues include charges to patients for routine services, nursing services, and professional
services.

Other operating revenues include revenues from services other than health care provided to patients as well as
from sales and services to persons other than patients.

Nonoperating revenues are primarily from gifts, grants, and investment income and gains that are peripheral or
incidental to the major operation of the hospital.

(2) a. OO d. PS g. OO j. PS
b. N e. N h. PS k. N
c. PS f. N i. OO

Problem VI
(1) Accounts Receivable............................................................................................. 1,010,000
Patient Service Revenues............................................................................... 1,010,000
To record billings.

(2) Inventory ....................................................................................................12,000

Other Operating Revenues—Unrestricted (contributions)............................. 12,000
To record donation of drugs from doctor.

(3) Cash....................................................................................................................... 28,800

Other Operating Revenues—Unrestricted...................................................... 28,800
To record cash revenues.
(4) Charity Services..................................................................................................... 13,000
Accounts Receivable...................................................................................... 13,000
To record charity allowance.

(5) Contractual Adjustments....................................................................................... 68,000

Accounts Receivable...................................................................................... 68,000
To record adjustments for Medicare charges.

(6) Provision for Bad Debts......................................................................................... 26,000

Allowance for Uncollectible Receivables...................................................... 26,000
To record increase in allowance.

Problem VII
(1) Accounts Receivable............................................................................................. 8,500,000
Revenues......................................................................................................... 8,500,000
Contractual Adjustments....................................................................................... 3,700,000
Allowance for Contractual Adjustments........................................................ 3,700,000
Cash....................................................................................................................... 4,460,000
Contractual Adjustments....................................................................................... 340,000
Allowance for Contractual Adjustments............................................................... 3,700,000
Accounts Receivable...................................................................................... 8,500,000
Cash....................................................................................................................... 250,000
Contractual Adjustments................................................................................ 250,000
Contractual Adjustments....................................................................................... 90,000
Cash................................................................................................................ 90,000

(2) Net patient service revenues = P4,620,000 (P8,500,000 – P3,700,000 – P340,000 + P250,000 – P90,000)

(3) Net cash flow from transactions with Medicare = P4,620,000 (P4,460,000 + P250,000 – P90,000)

(4) Assuming the P90,000 payment back to Medicare was in settlement, the revenue account will be closed along
with the contra-revenue account “Contractual Adjustments.” The net amount will appear on the financial
statements.

Problem VIII
Pure Air Rehabilitation Hospital
Statement of Activities
For Period Ended December 31, 20x9
Temporarily Permanently
Unrestricted Restricted Restricted Total
Patient service revenues (net of $26,000
contractual adjustments)................................................ P 714,000 P
714,000
Other operating revenues:
Seminar income.............................................................. P 23,000 P
23,000
Child day care income.................................................... 15,000 15,000
Parking fees.................................................................... 4,500
4,500
Total other operating revenue................................... P 42,500 P
42,500
Total operating revenues..................................................... P 756,500 P
756,500
Operating expenses:
Nursing services............................................................. P 230,000 P
230,000
Professional fees............................................................ 340,000 340,000
General and administrative............................................ 150,000 150,000
Depreciation expense..................................................... 90,000 90,000
Interest expense.............................................................. 13,000 13,000
Repairs and maintenance............................................... 110,000 110,000
Provision for uncollectibles........................................... 14,000
14,000
Total operating expenses.......................................... P 947,000 P
947,000
Loss from operations........................................................... P(190,500) P
(190,500)
Nonoperating revenue:
Interest income............................................................... P 3,000 P
3,000
Contributions.................................................................. P 18,000 18,000
Endowment income........................................................ 120,000 120,000
Gains on sale of endowments......................................... 56,000 P 0
56,000
Total nonoperating revenue...................................... P 3,000 P194,000 P 0 P
197,000
Change in net assets............................................................. P(187,500) P194,000 P 0 P
6,500
Net assets, January 1, 20X9................................................. 800,000 755,000 750,000
2,305,000
Net assets, December 31, 20X9........................................... P 612,500 P949,000 P750,000
P2,311,500

Problem IX
(1) Adventist Hospital
Statement of Activities
For Year Ended June 30, 20x8
Temporarily Permanently
Unrestricted Restricted Restricted
Total

Public support and revenue:

Public support:
Contributions....................................................................... P300,000 P15,000
P315,000
Annual auction proceeds (net of P11,000 expense)............ 31,000
31,000
Total public support......................................................... P331,000 P15,000 P 0
P346,000
Revenues:
Membership dues................................................................. P 25,000 P
25,000
 Program service fees............................................................ 30,000
30,000
Investment income............................................................... 10,000
10,000
Endowment income............................................................. P20,000
20,000
Total revenue................................................................... P 65,000 P20,000 P 0 P
85,000
Net assets released from restrictions:
Satisfaction of program restrictions........................................ P 5,000 P (5,000) P 0
Total public support, revenue, and other support....................... P401,000 P30,000 P 0
P431,000
Expenses:
Program services:
Blind children...................................................................... P150,000 P
150,000
Deaf children....................................................................... 120,000
120,000
Supporting services:
Management and general..................................................... 51,000*
51,000
Fund raising......................................................................... 9,000
9,000
Total expenses............................................................................ P330,000 P 0 P 0
P330,000
Change in net assets.................................................................... P 71,000 P30,000 P 0
P101,000
Net assets, July 1, 20x7............................................................... 38,000 3,000 250,000
291,000
Net assets, June 30, 20x8............................................................ P109,000 P33,000 P250,000
P392,000
*P49,000 + P2,000 provision for uncollectible pledges
(2) Adventist Hospital
Statement of Financial Position
June 30, 20x8
Assets:
Cash................................................................................................................................ P 40,000
Pledges receivable (net of P3,000 allowance)................................................................ 9,000
Bequest receivable.......................................................................................................... 5,000
Accrued interest receivable............................................................................................. 1,000
Long-term investments................................................................................................... 140,000
Endowment investments................................................................................................. 250,000
Total assets.............................................................................................................. P445,000
Liabilities:
Accounts payable and accrued expenses........................................................................ P 51,000
Refundable deposits........................................................................................................ 2,000
Total liabilities......................................................................................................... P 53,000
Net assets:
Unrestricted..................................................................................................................... P109,000
Temporarily restricted.................................................................................................... 33,000
 Permanently restricted.................................................................................................... 250,000
Total net assets........................................................................................................ P392,000
Total liabilities and net assets................................................................................................ P445,000

Multiple Choice Problems

1. c 21.
a 41. d 61. a 81. c 101. c 121. c 141. a 161. c
2. * 22.
a 42. c 62. c 82. b 102. b 122. a 142. a 162. c
3. * 23.
c 43. d 63. d 83. a 103. c 123. b 143. b 163. a
4. d 24.
* 44. b 64. a 84. d 104. b 124. a 144. d 164. c
*
5. d 25. a 45. a 65. b 85. *** 105. c 125. c 145. a 165. b
6. c 26. b 46. b 66. d 86. d 106. a 126. a 146. b 166. c
7. d 27. d 47. c 67. c 87. d 107. a 127. b 147. c 167. b
8. d 28. c 48. b 68. c 88. d 108. a 128. d 148. d 168. a
9. a 29. d 49. d 69. b 89. c 109. d 129. b 149. B 169. d
10. a 30. b 50. a 70. c 90. b 110. b 130. a 150. c 170. a
11. b 31. b 51. d 71. c 91. d 111. a 131. d 151. c 171. c
12. b 32. c 52. a 72. d 92. a**** 112. b 132. a 152. c 172. d
13. a 33. d 53. c 73. c 93. a***** 113. d 133. c 153. b 173. b
14. a 34. c 54. a 74. c 94. b 114. b 134. b 154. d 174. b
15 c 35 a 55 b 75 b 95 c 115. a 135. b 155. d 175. c
16. a 36. c 56. b 76. a 96. a 116. c 136. d 156. c 176. b
17. d 37. a 57. b 77. d 97. c 117. Ignore 137. a 157. a 177. d
18. b 38. b 58. c 78. c 98. d 118. d 138. b 158. c 178. a
19. a 39. a 59. a 79. Ignore 99. d 119. b 139. d 159. c 179. d
20. b 40. d 60. d 80. a 100. b 120. c 140. b 160. c 180. c
**No answer available

181. b 186. a 191. d 196. b 201. D 206 e 211. c 216. b

182. c 187. c 192. d 197. c 202. D 207. a 212. d 217. c
183. a 188. d 193. b 198. b 203. A 208 a 213. c 218. a
184. c 189. d 194. d 199. a 204. A 209 b 214. c 219. b Items 1 to
185. c 190. a 195. b 200. c 205. c 210 d 215. d 6:
Statement
of Activities
For Year Ended December 31, 20x8
Temporarily Permanently
Unrestricted Restricted Restricted Total

Changes in net assets:

Revenues and gains:
Tuition and fees............................................................ P1,500,000
................................................................................. P1,500,000
Contributions................................................................ 265,000P 200,000
P 500,000......................................................................... 965,000
Government appropriations, grants, and
contracts.................................................................. 800,000
....................................................................800,000
Investment income on endowment............................... 15,000
......................................................................15,000
 Net realized gains on endowment investments............ 25,000
25,000
Other investment income........................................ 250,000
....................................................................250,000
Sales and services of auxiliary enterprises................... 500,000
....................................................................500,000
(1) Total revenues and gains......................................... P3,315,000
P 240,000.......................................................................P 500,000 P4,055,000
Net assets released from restrictions:
Satisfaction of program restrictions................................... P 75,000P (75,000)
P............................................................................0
Satisfaction of equipment acquisition restrictions............. 250,000 (250,000) 0
Satisfaction of time restrictions......................................... 50,000 (50,000)
...............................................................................0
*(2) Total net assets released from restrictions.................... P 375,000 P(375,000)
P............................................................................0
*(3) Total revenues and gains and other support................. P3,690,000 P(135,000) P 500,000
P4,055,000

Expenses:
Research............................................................................. P 840,000 P
840,000
Instruction.......................................................................... 1,230,000
................................................................................. 1,230,000
Academic support.............................................................. 250,000
....................................................................250,000
Student services................................................................. 200,000
....................................................................200,000
Institutional support........................................................... 225,000
225,000
Operation and maintenance of plant.................................. 400,000
....................................................................400,000
Student aid......................................................................... 350,000
....................................................................350,000
Auxiliary enterprises.......................................................... 475,000
....................................................................475,000
(4) Total expenses.............................................................. P3,970,000
P 0 P............................................................................0 P3,970,000
(5) Increase (decrease) in net assets................................... P (280,000) P(135,000)
P 500,000.......................................................................P 85,000
Net assets, January 1, 20x8..................................................... 675,000 975,000
2,500,000...................................................................... 4,150,000
(6) Net assets, December 31, 20x8........................................ P 395,000 P 840,000 P3,000,000
P4,235,000

Statement of Financial Position

December 31, 20x8
Assets:
Cash........................................................................................................................................ P 255,000
Accounts receivable............................................................................................................... 625,000
Contributions receivable........................................................................................................ 85,000
Inventory of supplies.............................................................................................................. 75,000
Student loans receivable........................................................................................................ 300,000
 Land, buildings, and equipment (net).................................................................................... 1,000,000
Endowment investments........................................................................................................ 3,025,000
(7) Total assets...................................................................................................................... P5,365,000
Liabilities:
Accounts payable................................................................................................................... P 220,000
Amounts held on behalf of others.......................................................................................... 250,000
Long-term debt....................................................................................................................... 560,000
U.S. government grants refundable....................................................................................... 100,000
(8) Total liabilities................................................................................................................ P1,130,000
Net assets:
Unrestricted............................................................................................................................ P 395,000
Temporarily restricted............................................................................................................ 840,000
Permanently restricted........................................................................................................... 3,000,000
Total net assets................................................................................................................ P4,235,000
Total liabilities and net assets....................................................................................................... P5,365,000

11. b (The financial aid is shown as a direct reduction to the tuition revenue so that revenues and support should
total only P780,000.)
13. a -
Gross tuition fee P 2,300,000
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) 50,000
Gross Tuition Fee (net of refunds) P 2,250,000
Less: Tuition remissions granted to faculty member’s P 10,000
families
University-sponsored scholarships, fellowships, tuition and
fee remissions, or waivers depends on whether the recipient
provides any services to the university that DOES NOT
require any EMPLOYMENT-type of work to be given to
the university (no services on the part of the student)
140,000 150,000
Net TF Revenue P 2,100,000

14. a -
Net TF Revenue (No. 13) P 2,100,000
Less: Expenses - tuition waivers given as a result of employment by
the university – such as those given to graduate assistants)
_________0
Increase in Unrestricted Net Assets P 2,100,000

15. c -
Gross tuition fee P 2,300,000
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) ____50,000
Gross Tuition Fee (net of refunds) P 2,250,000
Less: Tuition remissions granted to faculty member’s
families ____10,000
Net TF Revenue P 2,240,000

Correction: In relation to No. 15

16. a
Gross tuition fee P 2,300,000
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) ____50,000
 Gross Tuition Fee (net of refunds) P 2,250,000
Less: Tuition remissions granted to faculty member’s
families ____10,000
Net TF Revenue P 2,240,000
Less: Expenses - tuition waivers given as a result of
employment by the university–given to graduate
assistants 140,000
Increase in Unrestricted Net Assets P 2,100,000

17. d –
Gross tuition fee P 4,000,000
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) _________0
Gross Tuition Fee (net of refunds) P 4,000,000
Less: Tuition remissions granted to faculty member’s P 0
Families
University-sponsored that DOES NOT require any
EMPLOYMENT-type of work to be given to the
university (no services on the part of the student) 150,000 150,000
Net TF Revenue P 3,850,000
*it is presumed that the tuition remissions awarded to graduate teaching assistant of P300,000 is presumed to
be “an employment-type of work”, therefore it should be considered as expenses (refer to No. 18).

18. b -
Net TF Revenue (No. 17) P 3,850,000
Less: Expenses - tuition remissions/waivers given as a result of
employment by the university – such as those given to
graduate assistants) ___300,000
Increase in Unrestricted Net Assets P 3,550,000

Correction: …University of Assumption instead of Dover

19. a –
Gross tuition fee P ?
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) _________?
Gross Tuition Fee (net of refunds) P 4,000,000
Less: Tuition remissions granted to faculty member’s P 0
Families
University-sponsored scholarship and fellowship, that DOES
NOT require any EMPLOYMENT-type of work to be
given to the university (no services on the part of the
student) ________0 _________0
Net TF Revenue P 4,000,000

Correction: In relation to No. 19

20. b -
Net TF Revenue (No. 19) P 4,000,000
Less: Expenses - scholarship and fellowship given as a result of
employment by the university – such as those given to
undergraduate students:
Tuition remissions – graduate teaching assistants P 300,000
Scholarship __150,000 ___450,000
Increase in Net Assets P 3,550,000
21. a -
Gross tuition fee P ?
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) _________?
Gross Tuition Fee (net of refunds) P 1,700,000
Less: Tuition remissions granted to faculty member’s
families P 50,000
University-sponsored scholarships, fellowships, tuition and
fee remissions, or waivers depends on whether the recipient
provides any services to the university that DOES NOT
require any EMPLOYMENT-type of work to be given to
the university (no services rendered)
150,000 ___200,000
Net TF Revenue P 1,500,000

22. a -
Net TF Revenue (No. 21) P 1,500,000
Less: Expenses - tuition waivers given as a result of employment by
the university – such as those given to graduate assistants)
_________0
Increase in Unrestricted Net Assets P 1,500,000

23. c –
Gross tuition fee P ?
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) _________?
Gross Tuition Fee (net of refunds) P 1,700,000
Less: Tuition remissions granted to faculty member’s
families P 50,000
University-sponsored scholarship and fellowship, that DOES
NOT require any EMPLOYMENT-type of work to be
given to the university (no services on the part of the
student) ________0 ___ 50,000
Net TF Revenue P 1,650,000

Correction: In relation to No. 23

24. No answer available – P1,500,000
Net TF Revenue (No. 23) P 1,650,000
Less: Expenses - scholarship and fellowship given as a result of
employment by the university – such as those given to
undergraduate students:
Scholarship ___150,000
Increase in Net Assets P 1,500,000

25. a – P4,000,000
Gross tuition fee P ?
Less: Tuition refund Tuition refunds (money returned to
students because they did not take classes) _________?
Gross Tuition Fee (net of refunds) P 4,000,000
Less: Tuition remissions granted to faculty member’s
families P 80,000
University-sponsored scholarships, fellowships, tuition and
fee remissions, or waivers depends on whether the recipient
provides any services to the university that DOES NOT
 require any EMPLOYMENT-type of work to be given to
the university (no services rendered)
______0 ____80,000
Net TF Revenue P 3,920,000

26. b – P3,920,000
Gross Tuition Fee (net of refunds) P 4,000,000
Less: Tuition remissions granted to faculty member’s
families P 80,000
University-sponsored scholarships, fellowships, tuition and
fee remissions, or waivers depends on whether the recipient
provides any services to the university that DOES NOT
require any EMPLOYMENT-type of work to be given to
the university (no services rendered)
______0 ____80,000
Net TF Revenue P 3,920,000
Less: Expenses - scholarships, fellowships, tuition waivers given as
a result of employment by the university – such as those
given to graduate assistants)/with services rendered
___220,000
Increase in Unrestricted Net Assets P 3,700,000

27. same with No. 17

41. d – term endowment

Items 83 to 90:
Statement of Activities
For Year Ended December 31, 20X8

Temporarily Permanently
Unrestricted Restricted Restricted Total
Patient service revenues (net of P1,543,500 contractual
adjustments and charity care).............................................. P 9,505,700
...................................................................................... P 9,505,700
Other operating revenues:
Research grant..................................................................... P 361,000
...................................................................................... P 361,000
Contributions....................................................................... P 225,000
.........................................................................225,000
Donated services.................................................................. 145,000
...................................................................................... 145,000
Cafeteria meal sales............................................................. 108,000
...................................................................................... 108,000
Parking lot fees.................................................................... 31,000
...................................................................................... 31,000
Vending machine sale.......................................................... 68,000
...................................................................................... 68,000
(83) Total other operating revenue.......................................... P 713,000
P 225,000..........................................................................P 0 P 938,000
(84) Net assets released from restrictions:
Satisfaction of plant acquisition restrictions........................ 220,000
(220,000).......................................................................... 0
 Satisfaction of program restrictions..................................... 125,000
(125,000).......................................................................... 0
***(85) Total operating revenue and other support................ P10,563,700
P (120,000)........................................................................P 0 P10,443,700
Operating expenses:
Nursing services.................................................................. P 6,589,100
...................................................................................... P 6,589,100
Dietary services................................................................... 1,511,200
...................................................................................... 1,511,200
Maintenance services........................................................... 838,300
...................................................................................... 838,300
Administrative services....................................................... 112,500
...................................................................................... 112,500
Interest expense................................................................... 142,200
...................................................................................... 142,200
Depreciation and amortization............................................ 478,200
...................................................................................... 478,200
Provision for uncollectibles................................................. 341,600
...................................................................................... 341,600
(86) Total operating expenses................................................. P 10,013,100
P 0 P..................................................................................0 P10,013,100
(87) Income (loss) from operations......................................... P 550,600
P (120,000)........................................................................P 0 P 430,600
Nonoperating revenues:
Interest income....................................................................
Contributions....................................................................... P 100,200
P 540,000..........................................................................P 150,000 P 790,200
Investment income............................................................... 207,000
...................................................................................... 207,000
Endowment income............................................................. 12,000
25,000............................................................................... 37,000
Loss on sale of endowment investments............................. (5,300)
...................................................................................... (5,300)
(88) Total nonoperating revenues............................................ P 313,900
P 565,000..........................................................................P 150,000 P 1,028,900
(89) Change [Increase/(Decrease)] in Net Assets P864,500 P 445,000
P 150,000..........................................................................P 1,459,500
Net assets, January 1, 20X8.................................................... 625,000
825,000............................................................................. 2,350,000 3,800,000
(90) Net assets, December 31, 20X8....................................... P 1,489,500 P1,270,000 P2,500,000
P 5,259,500

85.*** No answer available Unrestricted – P10,563,700; Temporary – (P120,000)

91. d (The charity care work should not be recorded in any way because there is no expectation of
collection. The contractual adjustment is reported as a contra balance to the revenue.)
92. ****c – presumed to be Gross - note the term “would have earned” (P7,000,000 – P1,000,000)*
Gross Patient Service Revenue *P 6,000,000
Less: Third-party payors ___500,000
Net Patient Service Revenue P 5,500,000

93. *****a – note the term “would have earned” (P9,000,000 – P1,500,000)*
Gross Patient Service Revenue *P 7,500,000
 Less: Third-party payers ___750,000
Net Patient Service Revenue P 6,750,000

95. c (Amounts charged to patients less contractual adjustments)

99. d (These services do not meet the criteria for donated services that are recognized.)
194. b (The charity must convey the donation to the designated beneficiary. Unless the charity was given
varied powers that allowed it to change the beneficiary, this amount
202. d (If the other information that is included contains a call for a specific action that will help accomplish
the mission of the charity and if the mailing is not directed solely to potential donors, a portion of the
costs can be allocated to program service expenses.)
203. a (Because of the time restriction, the amount spent for playground equipment remains in temporarily
restricted net assets until depreciated. The equipment was bought at the end of the year so that no
depreciation was recorded and no reclassification was made.)

Theories
Completion Statements
1. unconditional
2. nonreciprocal
3. unconditional
4. when received
5. conditional
6. fair value
7. market quotations, appraisals, present-value calculations
8. nonfinancial assets, specialized skills
9. fair value, asset or asset enhancement
10. collection items
11. selectively
12. unrestricted, temporarily restricted, permanently restricted
13. endowments
14. temporarily restricted
15. temporarily restricted
16. temporarily restricted, unrestricted, donor-imposed stipulations, accounting policy, explicit donor
instructions
17. expire
18. whole
19. donor-imposed restrictions, donor-imposed restrictions
20. total assets, total liabilities, total net assets (equity)
21. unrestricted, temporarily restricted, permanently restricted
22. board-designated, unrestricted
23. category
24. unrestricted
25. separately
26. natural, matrix
27. gross
28. columnar, layered
29. change
30. direct, indirect
31. permits

True or False Statements

32. True 43. True 54. True 65. True
33. False 44. False 55. False 66. False
34. False 45. False 56. True 67. False
 35. True 46. False 57. False 68. True
36. True 47. False 58. False 69. True
37. False 48. False 59. False 70. True
38. False 49. True 60. True 71. False
39. True 50. False 61. True 72. False
40. True 51. True 62. True 73. False
41. True 52. False 63. True
42. False 53, False 64. True

Multiple Choice Theories

74. a 84. a 94. e 104. a 114. c 124. b 134. d 144. c
75. c 85. d 95. a 105. b 115. b 125. d 135. c 145. c
76. b 86. c 96. b 106. d 116. b 126. b 136. c 146. a
77. b 87. e 97. b 107. c 117. b 127. c 137. b 147. c
78. e 88. e 98. d 108. b 118. d 128. a 138. d
79. e 89. d 99. d 109. b 119. b 129. d 139. c
80. e 90. c 100. d 110. a 120. d 130. d 140. b
81. e 91. d 101. a 111. b 121. b 131. d 141. c
82. d 92. d 102. b 112. b 122. d 132. d 142. b
83. a 93. c 103. a 113. d 123. e 133. b 143. a