Evergreen Chalet (Chalet) is a seniors’ residence operated as a not-for-profit organization. During 20X2, Chalet built a new bingo hall on its property at a cost of $600,000. The bingo hall was financed with $300,000 of donations from private individuals and a $300,000 grant from the provincial government. In addition, a $25,000 donation was received specifically to cover the cost of future maintenance of the bingo hall. The bingo hall commenced operations on September 1, 20X2. In the last four months of the year, $7,500 was spent on maintenance of the bingo hall. The estimated useful life of the bingo hall is 40 years. Chalet amortizes its capital assets using the straight-line method.
Among other things, Chalet has an excellent reputation for its bingo nights. Most of the callers and runners for the bingo nights are unpaid volunteers.
Required
a. Based on the information provided, prepare a partial SFP to capture all activities related to the bingo hall, assuming Chalet uses the deferral method and does not have a separate capital fund for the bingo hall.
b. Differentiate between expenditure accounting and expense accounting as they apply to the $600,000 cost of the bingo hall.
c. Identify the conditions that must be met to recognize the value of volunteers’ time in the of a not-for-profit organization.
d. Prepare the journal entry that would be made under the deferral method if volunteers’ services were to be recorded at a value of $5,000.
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com