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Assume that no restrictions are placed on the use of the donated resources.

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1. Assume that no restrictions are placed on the use of the donated resources.;a. Prepare the required June 17, 20X8, entry.;b. Prepare any entries necessary in 20X9 if $400,000 of the gift is used to finance VHWO operating expenses.;2. Assume that the donation was restricted to research.;a. Prepare the required June 17, 20X8, entry.;b. Prepare the entries required in 20X9 as a result of spending $400,000 for research during 20X9.;3. Assume that the donation was restricted for fixed asset acquisitions.;a. Prepare the required June 17, 20X8, entry.;b. Prepare any entries required in 20X9 if $400,000 of the gift is used to purchase a new building. The building is placed in service at year end.;4. Explain or illustrate how each of the three preceding situations would be reported in the nongovernment VHWO?s financial statements in 20X8 and in 20X9.;P16-2 (Fixed-Asset-Related Entries) The Rena Hill Society entered into the following transactions in 20X8.;April 1 ? Purchased equipment with donor-restricted resources for $47,300. The equipment has a 5-year useful life, no salvage value, and was used throughout the rest of the year.;July 1 ? Issued $10,000,000 of 10%, 20-year bonds at par to finance construction of a major building addition.;During 20X8 - $800,000 of contributions to be used to service the bonds were received. Interest is due each June 30 and December 31.;October 31 ? Sold machinery for $19,000 halfway through its 8-year useful life. The machine originally cost $25,000 and was expected to have a $10,000 salvage value. (Assume straight-line depreciation).;December 31 ? The first semiannual interest payment on the bonds was made (Assume straight-line depreciation).;Prepare all entries required on the preceding dates to record these transactions, assuming that the Rena Hill Society is a nongovernment ONPO and that December 31 is the end of the fiscal year.

 

Paper#26401 | Written in 18-Jul-2015

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