[Oimie]

NINJA Question –

Community Enhancers, a nongovernmental not-for-profit entity, received the following unconditional promises from donors, sometimes referred to as “pledges”:

Unrestricted $400,000

Restricted for capital additions 300,000

Unconditional promises are legally enforceable. However, Community’s experience indicates that 5% of all unconditional promises prove to be uncollectible. What amount should Community report as contributions receivable, net of any required allowance account?

Answer is $665,000 (700,000 x 95%)

My question is, why did they take 5% off of both 400,000 and 300,000? Isn’t the 300,000 conditional? I thought the 5% is referring to the 400,000. Maybe it’s because I do not know what “restricted for capital additions” mean. Can someone clear things up for me? Thanks!

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[Missy]

The question states they received the following unconditional promises, one restricted one unrestricted. Then it says they've found 5% of unconditional promises (which they both are) to be uncollectible. So it's 5% of both.

Old timer,  A71'er since 2010.

Finance manager/HR manager

 

 

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Oimie]

@mla11692: Thanks for the reply. Isn't restricted assets the same as conditional? I thought they must meet the donor's conditions in order for the restricted assets to become unrestricted.

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[Author]

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