Big Research Foundation Is a Large Not-For-Profit Organization That Funds

question 27

Essay

Big Research Foundation is a large not-for-profit organization that funds research into a variety of diseases. Annual revenues are in excess of $10 million. It has an endowment fund, a general fund, and a capital fund. You have just been appointed treasurer on its board and the accountant has come to you with a variety of questions.
Required:
Address each of the following questions, making sure that your advice complies with GAAP for not-for -profit organizations.
1. Big received a large endowment of $2 million on January 31, 20X9. During the year ended 20X9, there was interest earned of $60,000.
Prepare the journal entries required to record the receipt of the endowment and the interest earned.
2. During the year, 1,500 volunteer hours were provided. The accountant has estimated that the value of this time is $37,500. The accountant stated that without the volunteers, Big would have had to hire employees to perform the work.
Determine how the volunteer hours should be reported.
3. A large piece of research equipment was donated to the laboratory. The value of the equipment is $250,000 and it estimated to last about 10 years.
Prepare the journal entries related to this donated equipment for the year.

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Definitions:

Correct Decisions

Choices or judgments that are accurate, effective, and based on appropriate consideration of facts and rational analysis.

Standards

Established norms or criteria defining technical specifications, quality benchmarks, and practices intended to ensure reliability, safety, and compatibility in products, services, or processes.

Guanxi

A Chinese term describing the network of relationships among people, influencing personal and business interactions and outcomes.

Reciprocity

A mutual exchange of privileges or concessions, often between two countries, such as trade agreements or recognition of licenses.