SAMPLE ACT410: GOVERNMENT AND NONPROFIT ACCOUNTING

Transcription

1 Credit Hours: 3 ACT410: GOVERNMENT AND NONPROFIT ACCOUNTING Contact Hours: This is a 3-credit course, offered in accelerated format. This means that 16 weeks of material is covered in 8 weeks. The exact number of hours per week that you can expect to spend on each course will vary based upon the weekly coursework, as well as your study style and preferences. You should plan to spend hours per week in each course reading material, interacting on the discussion boards, writing papers, completing projects, and doing research. COURSE DESCRIPTION AND OUTCOMES Course Description: This course provides a thorough understanding of governmental accounting topics. Topics covered include financial reporting of state and local governments, learning about the governmental operating statement accounts and budgetary accounting, accounting for general capital assets, and capital projects. Course Overview: This course will provide you with an awareness of the issues of government and not-for-profit accounting. It will help you understand many issues, including revenue and expenditure recognition, assets and liability valuation, the scope of the reporting entity, and reporting cash flows. You will also learn about current accounting and reporting standards and practices for governmental and not-for-profit entities. This course examines all other Governmental Accounting Standards Board (GASB) statements, applicable Financial Accounting Standards Board (FASB) standards, American Institute of Certified Public Accountants (AICPA) audit and accounting guides and application of the Office of Management and Budget and the U.S. Government Accountability Office (GAO) issues. Course Learning Outcomes: 1. Describe the key unique characteristics of government and nonprofit accounting. 2. Demonstrate an understanding of fund accounting and how to treat the different funds in relation to the required entries. 3. Articulate budgetary accounting and its related reporting practices.

2 4. Analyze the format and content of the fund financial statements and government-wide financial statements. 5. Assess and present knowledge of the timing of recognition and classification of revenues and expenses of non-government not-for-profit entities. 6. Prepare non-government not-for-profit organizational financial statements. PARTICIPATION & ATTENDANCE Prompt and consistent attendance in your online courses is essential for your success at CSU-Global Campus. Failure to verify your attendance within the first 7 days of this course may result in your withdrawal. If for some reason you would like to drop a course, please contact your advisor. Online classes have deadlines, assignments, and participation requirements just like on-campus classes. Budget your time carefully and keep an open line of communication with your instructor. If you are having technical problems, problems with your assignments, or other problems that are impeding your progress, let your instructor know as soon as possible. COURSE MATERIALS Textbook Information is located in the CSU-Global Booklist on the Student Portal. COURSE SCHEDULE Due Dates The Academic Week at CSU-Global begins on Monday and ends the following Sunday. Discussion Boards: The original post must be completed by Thursday at 11:59 p.m. MT and Peer Responses posted by Sunday 11:59 p.m. MT. Late posts may not be awarded points. Opening Exercises: Take the opening exercise before reading each week s content to see which areas you will need to focus on. You may take these exercises as many times as you need. The opening exercises will not affect your final grade. Mastery Exercises: Students may access and retake mastery exercises through the last day of class until they achieve the scores they desire. Critical Thinking: Assignments are due Sunday at 11:59 p.m. MT. Live Classroom: Although participation is not required, Live Classroom sessions are held during Weeks 1, 3, 5, and 7]. There are four total sessions.

3 WEEKLY READING AND ASSIGNMENT DETAILS Module 1 Readings Chapter 1 & 2 in Government and Not for Profit Accounting: Concepts and Practices Government and Not-For-Profit Accounting: Concepts and Practices Chapters 1 & 2 PowerPoint slides Opening Exercise (0 points) Discussion (25 points) Live Classroom (0 points) Critical Thinking: (60 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option #1: Accounting Principles for Governments and the Balance Sheet Instructions: Provide complete answers to these two problems: 1. Why is it difficult to develop accounting principles that are appropriate for governments within the same category (e.g., cities, counties) and even more difficult to develop them for governments within different categories? 2. Upon examining the balance sheet of a large city, you notice that the total assets of the general fund far exceed those of the combined total of the city s 10 separate special revenue funds. Moreover, you observe that there are no funds for public safety, sanitation, health and welfare, and general administration all important functions of the government. Why do you suppose the city has not attempted to even out the assets in the funds? Why does it not maintain funds for each of its major functional areas? 2. Requirements Conclusion

4 Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. Reach out to your instructor if you have any questions about the assignment. The required number of pages for the assignment does not include the title page and the reference page. Option #2: Internal and External Users of Governmental Statements Instructions: Provide complete answers to these two problems: 1. Why is it more difficult to distinguish between internal and external users in governments than in businesses? 2. From what two perspectives must the financial statements under the GASB No. 34 reporting model be prepared? How do the two differ from each other? 2. Requirements Conclusion Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Mastery Exercise (10 points)

5 Module 2 Readings Chapters 3 & 4 in Government and Not for Profit Accounting: Concepts and Practices Reading 2 Opening Exercise (0 points) Discussion (25 points) Critical Thinking: (60 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option #1: Transactions for Fund Statements and Government-wide Statements Preston Village engaged in the following transactions: It issued $20 million in bonds to purchase a new municipal office building. The proceeds were recorded in a capital projects fund. It acquired the building for $20 million. It recognized, as appropriate, $300,000 of depreciation on municipal vehicles. It transferred $2,060,000 from the general fund to a debt service fund. It paid $60,000 in interest on long-term debt and repaid $2 million of principal on the same longterm debt. It sold for $5 million village land that had been acquired for $4 million. The proceeds were recorded in the general fund. Instructions: Answer the following question based on the transactions outlined: 1. For each of the transactions, prepare journal entries to record them in appropriate governmental funds (which are accounted for on a modified accrual basis). 2. Prepare journal entries to reflect how the transactions would be reflected in government-wide statements (which are prepared on a full accrual basis). 3. How can governments justify preparing two sets of financial statements, each on a different basis? 2. Requirements 1 3 (don t forget to show your work) 3. Conclusion

6 Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Option #2: Accounting for Contributions Vary by Use Green Hills County received the following two contributions during a year: A developer (in exchange for exemptions to zoning restrictions) donated several acres of land that the county intended to convert to a park. The land had cost the developer $1.7 million. At the time of the contribution its fair market value was $3.2 million. A local resident donated several acres of land to the county with the understanding that the county would sell the land and use the proceeds to fund construction of a county health center. The land had cost the resident $2.5 million. The county sold the land intended for the health center for $3 million thirty days after the end of its fiscal year. Instructions: 1. Prepare journal entries to record the contributions. Be sure to specify the appropriate fund in which they would likely be made. 2. Comment on and justify any differences in the way you accounted for the two contributions. 3. Comment on how each of the contributions would be reported on the county s government-wide statements. 4. How would your answers differ if the land intended for the health center were not sold by the time year-end financial statements were issued? 2. Requirements 1 4 (don t forget to show your work) 3. Conclusion

7 Module 3 Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Mastery Exercise (10 points) Readings Chapter 5 & 6 in Government and Not-For-Profit Accounting: Concepts and Practices Reading 2 Opening Exercise (0 points) Discussion (25 points) Live Classroom (0 points) Mastery Exercise (10 points) Critical Thinking: (60 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option #1: A Government Accounts for Inventory on the Consumption Basis 1. Why do some accountants believe that it should offset the year-end inventory balance with a fund balance non-spendable when no comparable fund balance is required for cash, taxes receivable, or most other assets? 2. How should governments report their capital projects and debt service activities in their government-wide statements? 2. Requirements Conclusion

8 Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Option #2: Unassigned Fund and Lowering Interest Cost 1. A government s unassigned fund balance in the general fund at year-end should be indicative of the amount that the government has available for appropriation in future years. Explain and provide an example to support your answer. 2. What is meant by an in-substance defeasance, and how can a government use it to lower its interest costs? How must it recognize a gain or loss on defeasance if it accounts for the debt in a proprietary fund? How do the GASB standards pertaining to in-substance defeasances differ from those of the FASB? 2. Requirements Conclusion Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment.

9 Module 4 Readings Chapters 7 & 8 in Government and Not-For-Profit Accounting: Concepts and Practices Reading 2 Opening Exercise (0 points) Discussion (25 points) Mastery Exercise (10 points) Critical Thinking: (60 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option #1: GASB Statement 34 and Reporting of Expenditures Instructions: Provide complete answers to the following two questions: 1. Although Statement No. 34 requires that infrastructure assets be accounted for similarly to other capital assets, it allows for a major exception regarding depreciation. What is that exception? 2. A government s interest expenditure as reported in its debt service fund differs significantly from its interest expense, as reported in its government-wide statements. What is the most likely explanation for the difference? 2. Requirements Conclusion Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment.

10 Module 5 Option #2: GASB Statement 34 and Moral Obligation Bonds Instructions: Provide complete answers to the following two questions: 1. Per the provisions of Statement No. 34, governments must report their capital assets similarly to businesses in their government-wide statements. Yet the information provided is still inadequate to facilitate the major types of decisions and judgments made by statement users. Do you agree? Explain. 2. What distinguishes moral obligation bonds from other types of debt? Why would one government assume a moral obligation for another government s bonds? 2. Requirements Conclusion Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Readings Chapters 9 & 10 in Government and Not-For-Profit Accounting: Concepts and Practices Reading 2 Opening Exercise (0 points) Discussion (25 points) Live Classroom (0 points)

11 Mastery Exercise (10 points) Critical Thinking: (60 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option #1: Internal Service Funds and Non-expendable Endowments Instructions: Provide complete answers to the following two questions: 1. For what types of activities are internal service funds used to account? Provide several examples. Is a government required to account for the activities you cite in an internal service fund, or may it account for them instead in its general fund 2. What is the rationale for accounting for nonexpendable endowment funds on a full, rather than a modified, accrual basis? Why is it important that depreciation be charged on long-term assets held as fiduciary fund investments? 2. Requirements Conclusion Paper Requirements: Submit your responses to the questions in a 1-2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference Instructions: page. Reach out to your instructor if you have any questions about the assignment. Option #2: Absence of Principles and Endowment

12 Module 6 Provide complete answers to the following two questions: 1. It is sometimes asserted that the absence of specific principles as to what constitutes cost detracts from the objectivity of the financial statements of not only internal service funds but also financial statements of the general fund. In what sense might this be true? 2. Suppose that you are the independent auditor for a local performing arts association (either government or not-for-profit) that recently received a sizable endowment. The association s president has asked whether gains, both realized and unrealized, from the appreciation of endowment investments should be accounted for as expendable or nonexpendable resources. What should be the primary factors that determine your response? How should GASB or FASB pronouncements influence your recommendation? 2. Requirements Conclusion Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Readings Chapter 11 & 12 in Government and Not-For-Profit Accounting: Concepts and Practices Reading 2 Opening Exercise (0 points) Discussion (25 points)

13 Mastery Exercise (10 points) Critical Thinking: (70 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option #1: Preparing Journal Entries #1 Instructions: In each of the following scenarios, an organization receives a contribution in kind. Prepare journal entries, as necessary, to give them accounting recognition. For each, tell why you made an entry or why you did not. 1. A local not-for-profit art museum receives advertising for its yearly benefit from radio station WLOU. The airtime would have cost the museum $1, Volunteers for Breakfast on Bikes, a voluntary health and welfare organization, deliver hot meals to the elderly three times a week. Each of the 10 volunteers work about six hours per week. All of the volunteers have permanent jobs with pay averaging $36.10 an hour. 3. Lynn Simms, a local CPA, maintains the books and records of her church. Although her normal billing rate is $120 per hour, she accepts no payment from the church. She works on church matters approximately four hours a week. 4. A construction company allows a not-for-profit community association to use its bulldozer at no cost to clear land for a new baseball park. If the association had had to rent the bulldozer it would have incurred costs of $2, Requirements 1 4 (don t forget to show your work) 3. Conclusion Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table.

14 Module 7 For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Option #2: Preparing Journal Entries #2 Instructions: Contributions of long-lived assets may affect more than one type of fund. Discovery Barn, a not-forprofit science center for children, received a contribution of $30,000 explicitly designated for the acquisition of computers. During the year, it acquired $21,000 of computers, which it estimated to have a useful life of three years. It is the policy of the organization to charge an entire year s depreciation in the year of acquisition. Prepare all required journal entries, being certain to indicate the type of fund in which each entry would be made. Paper Requirements: Submit your responses to the questions in a 1- to 2-page document in MSWord. Label each question clearly. For computations, please include them in a table. For written answers, please make sure your responses are well written. Follow the CSU-Global Guide to Writing and APA. The required number of pages for the assignment does not include the title page and the reference page. Reach out to your instructor if you have any questions about the assignment. Readings Chapters 13, 14, and 15 in Government and Not-For-Profit Accounting: Concepts and Practices Opening Exercise (0 points) Discussion (25 points) Live Classroom (0 points) Mastery Exercise (10 points)

15 Module 8 Readings Chapters 16 & 17 in Government and Not-For-Profit Accounting: Concepts and Practices Reading 2 Opening Exercise (0 points) Discussion (25 points) Mastery Exercise (10 points) Portfolio Project (350 points) Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option #1: Government and Not-for-profit Accounting Portfolio #1 Your portfolio project will provide specific answers to the questions that follow. Apply what you have learned in this course to your answers to these questions. P. 2-6: The nature of a transaction gives a clue as to the type of fund in which it should be recorded. (125 points) Scenario: Kendal County engaged in the following transactions. For each, do the following: Prepare an appropriate journal entry Indicate the type of fund in which it would most likely be recorded Response: 1. It levied and collected $1 million in taxes and dedicated it to the repayment of outstanding general obligation bonds. 2. It billed sponsors of a charity bicycle ride $5,000 for providing police patrols during the ride. 3. It recognized $60,000 of cash dividends on investments dedicated to the support of a county arts center. 4. It recognized $70,000 of cash dividends on investments dedicated to scholarships for needy county residents. 5. It incurred $6 million in construction costs to complete a new county jail. The new jail was funded entirely with the proceeds of long-term bonds.

16 6. It transferred $400,000 of unrestricted funds to an appropriate fund to be invested and eventually used to repay the principal on the long-term jail bonds (entries in two funds required). 7. It recognized depreciation of $100,000 on equipment in a vehicle repair center that services all county departments that have motor vehicles. 8. It collected $30,000 in parking fees at the county-owned garage. 9. It issued $8 million in bonds to improve the city-owned electric utility. 10. It distributed $3 million in taxes collected on behalf of school districts located within the country. P. 5-4: Generally accepted modified accrual accounting practices pertaining to inventories may not fulfill the objectives of financial reporting. (125 points) Scenario: The following is an excerpt from a note to the financial statements of the city of Dallas (dates changed): The city prepares its annual appropriated general fund, debt service fund, and proprietary operating funds budgets on a basis (budget basis) which differs from generally accepted accounting principles (GAAP basis). The major differences between the budget and GAAP bases are that encumbrances are recorded as the equivalent of expenditures (budget) rather than a commitment of fund balance (GAAP) in the governmental funds. The city accounts for inventories on the purchases basis. One of the city s departments, which is accounted for in the general fund, budgeted $195,000 in supplies expenditures for fiscal It began the 2015 fiscal year with $30,000 of supplies on hand. It also had $12,000 of supplies on order. During the year, it ordered an additional $180,000 of supplies, received (and paid for in cash) $185,000 of supplies, and consumed $178,000 of supplies. Response: 1. Prepare all journal entries, consistent with GAAP, including budgetary and encumbrance entries that the department should make in Indicate the accounts and amounts related to supplies that the city would report on its year-end statement of revenues, expenditures, and changes in fund balance and balance sheet. 3. By how much did the department over- or under-spend its supplies budget (on a budget basis)? 4. Comment on the extent to which the city s statement provides a basis to: a. Assess the true economic costs associated with supplies b. Determine whether the city adhered to budgetary spending mandates

17 5. Suppose that in the last quarter of the year, department officials realized that the department was about to over-spend its supplies budget. They therefore ceased placing new orders for supplies. However, they imposed no restrictions on the use of supplies and thereby allowed the supplies inventory to decline to near zero. a. What impact would these cost-cutting measures have on supplies expenditures as reported in an actual-to budget comparison (on a budget basis)? b. What impact would the year-end measures have on reported supplies expenditures (per GAAP)? Would your response be different if the city accounted for supplies on the consumption basis? EX. 10-4: Investment gains and losses may have to be accounted for differently in nonexpendable than in expendable funds. (100 points) Scenario: The McCracken County Humane Society (MCHS), which is part of a county s reporting entity, established a permanent fund to provide support for its pet neutering program. As of the start of the year, the fund had a balance of $600,000, composed of both cash and marketable securities. The program itself, which is accounted for in a special revenue fund, is funded by both direct contributions and the income from the permanent fund. At the start of the year, the special revenue fund had assets (all investments) of $26,000. The following transactions and events occurred in a recent year. The MCHS conducted a Walk Your Pet Day fundraising drive. The event raised $120,000, of which $20,000 was in pledges expected to be collected shortly after year-end. The society acquired food and medicine at a cost of $60,000 (cash). During the year, it used $30,000 of these supplies. The society accounts for supplies on a consumption basis. It incurred other operating costs (all paid in cash) of $85,000. The society earned interest of $45,000 on investments accounted for in the permanent fund. During the year, the market value of the investments held by the permanent fund increased by $30,000. Per the terms of the agreement establishing the endowment, all capital gains, both realized and unrealized, must be added to principal. During the year, the value of investments held by the special revenue fund increased by $3,000. The society transferred cash to the special revenue fund in the amount of the earnings of the permanent fund.

18 Response: 1. Prepare journal entries to record the events and transactions. Be sure you indicate the fund in which they would be recorded. 2. In your opinion, should the unrealized gains on the investments held in the special revenue fund be considered expendable or nonexpendable? Explain. 3. How would the transfer from the permanent fund to the special revenue fund be reported in the government-wide statements? 2. P. 2-6, Responses P. 5-4, Responses EX. 10-4, Responses Conclusion Your final paper must be formatted per the CSU-Global Guide to Writing and APA. Include a title page. Submit your final case study to the Week 8 Assignments page. The required number of pages for the assignment does not include the title page and the reference page. Option #2: Government and Not-for-profit Accounting Portfolio #2 Your portfolio project will provide specific answers to questions that follow. Apply what you have learned in this course to your answers to these questions. P. 2-7: Is fund accounting less appropriate for businesses than for not-for-profits? (125 Points) Scenario: A newly formed not-for-profit advocacy organization, the Center for Participatory Democracy, requests your advice on setting up its financial accounting and reporting system. Meeting with the director, you learn the following: Member dues can be expected to account for approximately 80 percent of the organization s revenues.

19 The organization plans to seek grants from private foundations to carry out research projects pertaining to various political causes. The center has already received a gift of $100,000. The donor specified that the funds are to be placed in investment-grade securities and that only the income is to be used to support center activities. The center leases office space but owns its furniture, fixtures, and office equipment. The center has taken out a five-year term loan of $100,000. Although the loan is not due until its term expires, the organization intends to set aside $17,740 each year with the prospect that, properly invested, these payments will provide the necessary $100,000. Response: 1. Do you believe that the center should establish its accounting system on a fund basis? If so, why? 2. Assume you answered yes to question 1. What specific fund types do you think the center should set up? Explain. 3. Alternatively, suppose the center was a privately owned, profit-oriented consulting firm that provided political advice to its clients. The firm would charge its clients a fixed fee each month in return for which they would receive periodic newsletters and the opportunity to meet with the firm s partners. In addition, the firm expects to enter into contracts to carry out specific research projects for its clients. Would you now recommend that the firm establish its accounting system on a fund basis (assuming, of course, that it would prepare its external financial reports in accordance with generally accepted accounting principles applicable to businesses)? Explain. P. 5-5: Can a government sell assets to itself to generate revenue? (125 points) Scenario: A city is having fiscal problems in It expects to report a deficit in its general fund, the only fund that is statutorily required to be balanced. To eliminate the anticipated, deficit the city opts to sell its city hall to itself for $5 million. The city establishes a capital asset financing agency. The agency is a separate legal entity but will have to be reported as a component unit. As such it will be accounted for in a fund other than the general fund. The city structures the transaction as follows: The financing agency pays the city $5 million in 2015 in exchange for ownership of city hall. The city hall has been carried as general capital asset.

20 The agency acquires the necessary cash by issuing 20-year, 6 percent notes. The notes will be repaid in twenty annual installments of $435,920. The notes are guaranteed by the city at large. Hence, they are ultimately a liability payable from the general fund. The agency leases the city hall back to the city at large. Lease payments are to be paid out of general fund resources. Response: 1. Prepare journal entries in the general fund to record the sale and concurrent lease-back of the city hall. The lease-back satisfies the criteria of a capital lease transaction. 2. Prepare journal entries in the general fund to record the first lease payment, which was made in Will the transaction, in fact, reduce the 2015 anticipated fund deficit? Briefly justify the accounting principles that underlie this type of accounting. EX. 10-7: Nonexpendable fiduciary funds should be accounted for on a full accrual basis. (100 points) Scenario: The Nebraska Institute of Science (NIS) pools all its endowment funds so that it can obtain the benefits of a large and diverse investment portfolio. The institute recently acquired a commercial office building as an investment property. The cost was $12 million and its economic life was expected to be 15 years. Upon acquiring the building, NIS signed a 15-year lease with a tenant. The annual rent was $1.3 million, with the tenant responsible for all maintenance and other operating costs. Response: 1. Suppose that the NIS did not charge depreciation and distributed to expendable funds the entire income earned on the office building. a. What would be the total amount distributed over the 15-year life of the building? b. If NIS s estimate of economic life was correct, what would likely be the market value of the building when the lease expired? Would NIS have had available any cash for the acquisition of other assets that would compensate for the decline in value of the building? 2. Suppose NIS charged depreciation and distributed to expendable funds the entire income earned on the office building. a. What would be the total amount distributed over the 15-year life of the building?

21 b. If NIS s estimate of economic life was correct, what would likely be the market value of the building when the lease expired? c. Would NIS have had available any cash for the acquisition of other assets that would compensate for the decline in value of the building? 3. Suppose NIS charged depreciation and distributed to expendable funds the entire income earned on the office building. a. What would be the total amount distributed over the 15-year life of the building? b. If NIS s estimate of economic life was correct, what would likely be the market value of the building when the lease expired? Would NIS have had available any cash for the acquisition of other assets to compensate for the decline in value of the building? 2. P. 2-7, Responses P. 5-5, Responses EX. 10-7, Responses Conclusion Your final paper must be formatted per the CSU-Global Guide to Writing and APA. Include a title page. Submit your final case study to the Week 8 Assignments page. The required number of pages for the assignment does not include the title page or the reference page. Grading Scale A A B B B

22 C COURSE POLICIES C D F 0% Opening Exercises 0% Live Classroom 8% Mastery Exercises 59.9 or below 37% Critical Thinking Assignments 35% Final Portfolio Project Course Grading 20% Discussion Participation

23 IN-CLASSROOM POLICIES For information on late work and incomplete grade policies, please refer to our In-Classroom Student Policies and Guidelines or the Academic Catalog for comprehensive documentation of CSU-Global institutional policies. Academic Integrity Students must assume responsibility for maintaining honesty in all work submitted for credit and in any other work designated by the instructor of the course. Academic dishonesty includes cheating, fabrication, facilitating academic dishonesty, plagiarism, reusing /re-purposing your own work (see CSU-Global Guide to Writing and APA Requirements for percentage of repurposed work that can be used in an assignment), unauthorized possession of academic materials, and unauthorized collaboration. The CSU-Global Library provides information on how students can avoid plagiarism by understanding what it is and how to use the Library and Internet resources. Citing Sources with APA Style All students are expected to follow the CSU-Global Guide to Writing and APA Requirements when citing in APA (based on the APA Style Manual, 6th edition) for all assignments. For details on CSU-Global APA style, please review the APA resources within the CSU-Global Library under the APA Guide & Resources link. A link to this document should also be provided within most assignment descriptions in your course. Disability Services Statement CSU Global is committed to providing reasonable accommodations for all persons with disabilities. Any student with a documented disability requesting academic accommodations should contact the Disability Resource Coordinator at and/or ada@csuglobal.edu for additional information to coordinate reasonable accommodations for students with documented disabilities. Netiquette Respect the diversity of opinions among the instructor and classmates and engage with them in a courteous, respectful, and professional manner. All posts and classroom communication must be conducted in accordance with the student code of conduct. Think before you push the Send button. Did you say just what you meant? How will the person on the other end read the words? Maintain an environment free of harassment, stalking, threats, abuse, insults or humiliation toward the instructor and classmates. This includes, but is not limited to, demeaning written or oral comments of an ethnic,

24 religious, age, disability, sexist (or sexual orientation), or racist nature; and the unwanted sexual advances or intimidations by , or on discussion boards and other postings within or connected to the online classroom. If you have concerns about something that has been said, please let your instructor know.