ACT 410 Project AssignmentSecond projectP. 2-7 Is fund accounting less appropriate for businesses than for not-for-profits? (80 Points)Scenario 1A newly formed not-for-profit advocacy organization, the Center for Participatory Democracy, requests your advice on setting up its

ACT 410 Project Assignment

Second project:
P. 2-7: Is fund accounting less appropriate for businesses than for not-for-profits? (80 Points)

Scenario 1:
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.
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, and these payments will provide the necessary $100,000.
Instructions:

Do you believe that the center should establish its accounting system on a fund basis? If so, why?
Assume you answered ‘‘yes’’ to question 1. What specific fund types do you think the center should set up? Explain.
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 firms’ partners. In addition, the ?rm 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? (80 points)

Scenario 2:
A city is having fiscal problems in 2015. It expects to report a deficit in its general fund, the only fund that is statutorily required to be balanced. To eliminate the anticipated defecate 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.
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.
Instructions:

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.
Prepare journal entries in the general fund to record the first lease payment, which was made in 2015.
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. (70 points)

Scenario 3:
The Nebraska Institute of Science (NIS) pools all of 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.

Instructions:

Suppose that the NIS did not charge depreciation and distributed to expendable funds the entire ‘‘income’’ earned on the office building.
What would be the total amount distributed over the 15-year life of the building?
Assuming that 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?
Suppose NIS charged depreciation and distributed to expendable funds the entire ‘‘income’’ earned on the office building.
What would be the total amount distributed over the 15-year life of the building?
Assuming that 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?
Suppose NIS charged depreciation and distributed to expendable funds the entire ‘‘income’’ earned on the office building.
What would be the total amount distributed over the 15-year life of the building?
Assuming that 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?
Requirements:

Include a cover page denoting the paper title, your name, the course number and name, your instructor’s name, and the date you are making the submission.

 

Homework Market
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Homework Market

HomeworkMarket

Quality Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Homework Market

Qualified Writers

We have hired a team of professional writers experienced in academic and business writing. Most of them are native speakers and PhD holders able to take care of any assignment you need help with.

HomeworkMarket

Unlimited Revision

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account.

HomeworkMarket

Timely Delivery

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. We will always strive to deliver on time.

HomeworkMarket

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text.

HomeworkMarket

Customer Support 24/7

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Homework Market

Place your order

Fill in the order form and provide all details of your assignment.

Homework Market

Proceed with the payment

Choose the payment system that suits you most.

Homework Market

Receive the final file

Once your paper is ready, we will email it to you.

Homework Market Writing Services

No need to work on essay at night. Sleep tight, we will cover your back. We offer all kinds of essay writing services.

HomeworkMarket HomeworkMrket

Essays

Essay Writing Services

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

HomeworkMarket HomeworkMarket

Admissions

Admission Essays

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

HomeworkMarket HomeworkMarket

Editing

Essay Editing

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

HomeworkMarket HomeworkMarket

Research Paper

Research Paper

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied.