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Flashcards: Statement of Financial Position

The Professional Accountants Group is a private, not-for-profit organization that has 1,000 members. Each member pays $400 per year for their membership and receives benefits with a fair value of $120 as benefits of membership. How should the Professional Accountants Group report the revenue received from its members?

$120,000 is reported as membership dues revenue and $280,000 is reported as contribution revenue

$400,00 is reported as membership dues revenue

$400,00 is reported as contribution revenue

$120,000 should be reported as a reduction in expenses and $280,000 is reported as revenue

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Flashcards: Statement of Financial Position

Your answer:

$400,00 is reported as membership dues revenue

Your answer:

$400,00 is reported as contribution revenue

Your answer:

$120,000 should be reported as a reduction in expenses and $280,000 is reported as revenue

Correct answer:

$120,000 is reported as membership dues revenue and $280,000 is reported as contribution revenue

Explanation:

Only the portion of members fees that cover the fair value of benefits received are recorded as dues revenue (1K members x $120 per member). The remainder is recorded as contribution revenue (1K members x the difference of $280 per member).

Flashcards: Statement of Financial Position

Homer Company made a gift of $50,000 to a national art museum with the specification that the gift be conveyed to a local art festival. The museum does not have the power to change the beneficiary and Homer did not retain the right to revoke the gift or change the beneficiary. How should the museum report the receipt this gift?

As a liability

As public support

As $50,000 in revenue

It is not reported

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Flashcards: Statement of Financial Position

Your answer:

As public support

Your answer:

As $50,000 in revenue

Your answer:

It is not reported

Correct answer:

As a liability

Explanation:

This is reported as a liability to the museum, because the museum is obligated to pay the gift to another beneficiary.

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All CPA Financial Accounting and Reporting (FAR) Resources

Flashcards: Statement of Financial Position

Flashcards: Statement of Financial Position

Flashcards: Statement of Financial Position

Flashcards: Statement of Financial Position

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