Question 1

A nongovernmental not-for-profit organization received a $100,000 cash contribution in Year 1 restricted by the donor for the acquisition of equipment. The equipment was purchased in Year 2. Under ASC 958, how should this contribution be reported in the Statement of Cash Flows for Year 1?

Accepted Answer

Recall the specific rule for NFP Cash Flows: Cash contributions with donor restrictions for long-term purposes (like buying a building or endowment) are Financing activities.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Classifying all contributions as operating; confusing the receipt of cash (financing) with the purchase of the asset (investing).

A nongovernmental not-for-profit organization received a $100,000 cash contribution in Year 1 restricted by the donor for the acquisition of equipment. The equipment was purchased in Year 2. Under ASC 958, how should this contribution be reported in the Statement of Cash Flows for Year 1?

How to approach this question

Full Answer

Common mistakes

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