In Year 9, Sonia Walton promised Orange College that she would provide 75% of the funds needed to construct a new parking deck if the not-for-profit could get the remaining 25% of the funds needed from other donors by April 1, Year 11. At December 31, Year 10, the board of directors had received donations from other donors for 20% of the cost of the new parking deck and believed that the probability of NOT getting the remaining 5% was remote. For the year ended December 31, Year 10, Walton’s promise would:

Private not-for-profit (NFP) entities follow FASB ASC 958, requiring full accrual accounting and specialized financial statements focused on accountability rather than profit. Core reports include the Statement of Financial Position (net assets), Statement of Activities, Statement of Cash Flows, and Statement of Functional Expenses. Net assets are classified into two categories: with donor restrictions and without donor restrictions.  Key Financial Statements (FASB ASC 958) Statement of Financial Position (Balance Sheet): Reports assets, liabilities, and net assets (equity).... Show more

Private not-for-profit (NFP) entities follow FASB ASC 958, requiring full accrual accounting and specialized financial statements focused on accountability rather than profit. Core reports include the Statement of Financial Position (net assets), Statement of Activities, Statement of Cash Flows, and Statement of Functional Expenses. Net assets are classified into two categories: with donor restrictions and without donor restrictions. 

Key Financial Statements (FASB ASC 958)
Statement of Financial Position (Balance Sheet): Reports assets, liabilities, and net assets (equity). Assets/liabilities do not require classification as current or non-current.
Statement of Activities (Income Statement): Details changes in net assets (without donor restriction and with donor restriction).
Statement of Cash Flows: Uses the same three categories as for-profit entities (operating, investing, financing), but with distinct treatment for restricted contributions (e.g., long-term restricted donations are financing).
Statement of Functional Expenses: Mandatory for all voluntary health and welfare organizations, it breaks down expenses by nature (e.g., salaries, rent) and function (program services vs. supporting activities). 

Key NFP Accounting Concepts
Net Asset Classifications: Net assets are classified as either with or without donor restrictions based on external stipulations.
Revenue Recognition: Contributions and promised gifts are recognized as revenue when received, classified based on restriction, and recorded at fair value.
Donated Services/Assets: Donated services are recognized only if they create/enhance non-financial assets or require specialized skills that would typically be purchased. 

CPA FAR Exam Focus
The FAR exam often tests the distinction between NFP accounting and for-profit GAAP, particularly regarding the classification of donations, the functional allocation of expenses, and the classification of net assets.

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