ASU 2016-14 Illustrative Financial Statement Example

1 2019, Association of International Certified Professional Accountants. All rights reserved. Report of Independent Auditors and Financial Statements for Big National Charity, Inc. December 31, 20XX and 20XX ASU 2016-14 Financial Statement Example The AICPA's Not-for-Profit Expert Panel created this set of Illustrative Financial statements that shows the implementation of ASU 2016-14 . This document provides a non-authoritative Example of a possible presentation of a complete set of Financial statements for a nongovernmental NFP that is not a health care provider under current GAAP. The Example is fictitious. 2019, Association of International Certified Professional Accountants. All rights reserved.

2 CONTENTS PAGE Financial STATEMENTS Statements of Financial Position 1 Statements of Activities 2 3 Statements of Functional Expenses 4 Statements of Cash Flows Indirect Method 5 Statements of Cash Flows direct Method 6 Notes to Financial Statements 7 14 See accompanying notes. 1 2019, Association of International Certified Professional Accountants. All rights reserved. BIG NATIONAL CHARITY, INC. STATEMENTS OF Financial POSITION AS OF DECEMBER 31, 20XX AND 20XX 20XX20 XXASSETSCash and cash equivalents1,740,000$ 920,000$ Contributions receivable244,000 409,000 Due from related parties- 90,000 Prepaid expenses and other assets170,000 169,000 Investments1,158,000 677,000 Property and equipment, net151,000 207,000 Total assets3,463,000$ 2,472,000$ LIABILITIES AND NET ASSETSLIABILITIESA ccounts payable and accrued expenses373,000$ 219,000$ Due to related parties303,000 - Other liabilities143,000 147.

3 000 Total liabilities819,000 366,000 NET ASSETSW ithout donor restrictions1,599,000 914,000 With donor restrictions1,045,000 1,192,000 Total net assets2,644,000 2,106,000 Total liabilities and net assets3,463,000$ 2,472,000$ 2 See accompanying notes. 2019, Association of International Certified Professional Accountants. All rights reserved. BIG NATIONAL CHARITY, INC. STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 20XX Without DonorWith DonorRestrictionsRestrictionsTotalOperat ing activitiesREVENUES AND OTHER SUPPORTC ontributions4,976,000$ 515,000$ 5,491,000$ Contributions - from related parties755,000 - 755,000 Contributions - donation in-kind13,000 - 13,000 Interest and dividends20,000 9,000 29,000 Net assets released from restrictions662,000 (662,000) - Total revenues and other support6,426,000 (138,000)

4 6,288,000 EXPENSESA nimal services4,286,000 - 4,286,000 Supporting services:Management and general 283,000 - 283,000 Fundraising1,139,000 - 1,139,000 Total support services1,422,000 - 1,422,000 Total expenses5,708,000 - 5,708,000 Change in net assets from operations718,000 (138,000) 580,000 Nonoperating activitiesInvestment return, net(33,000) (9,000) (42,000) Total nonoperating activities(33,000) (9,000) (42,000) Change in net assets685,000 (147,000) 538,000 Net assets, beginning of year914,000 1,192,000 2,106,000 Net assets, end of year1,599,000$ 1,045,000$ 2,644,000$ See accompanying notes.

5 3 2019, Association of International Certified Professional Accountants. All rights reserved. BIG NATIONAL CHARITY, INC. STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 20XX Without DonorWith DonorRestrictionsRestrictionsTotalOperat ing activitiesREVENUES AND OTHER SUPPORTC ontributions3,485,000$ 106,000$ 3,591,000$ Contributions - from related parties324,000 324,000 Interest and dividends13,000 13,000 Net assets released from restrictions325,000 (325,000) - Total revenues and other support4,147,000 (219,000) 3,928,000 EXPENSESA nimal services3,269,000 - 3,269,000 Supporting services.

6 Management and general 353,000 - 353,000 Fundraising1,039,000 - 1,039,000 Total support services1,392,000 - 1,392,000 Total expenses4,661,000 - 4,661,000 Change in net assets from operations(514,000) (219,000) (733,000) Nonoperating activitiesInvestment return, net6,000 3,000 9,000 Total nonoperating activities6,000 3,000 9,000 Change in net assets(508,000) (216,000) (724,000) Net assets, beginning of year1,422,000 1,408,000 2,830,000 Net assets, end of year914,000$ 1,192,000$ 2,106,000$ 4 See accompanying notes.

7 2019, Association of International Certified Professional Accountants. All rights reserved. BIG NATIONAL CHARITY, INC. STATEMENTS OF FUNCTIONAL EXPENSES FOR THE YEARS ENDED DECEMBER 31, 20XX AND 20XX AnimalManagementServicesand GeneralFundraisingTotalGrants1,617,000$ 105,000$ -$ 1,722,000$ Salaries and benefits1,285,000 16,000 531,000 1,832,000 Education and awareness706,000 54,000 245,000 1,005,000 Occupancy203,000 30,000 72,000 305,000 Professional services120,000 48,000 45,000 213,000 Printing137,000 1,000 74,000 212,000 Information technologies15,000 4,000 35,000 54,000 Travel 79,000 1.

8 000 11,000 91,000 Depreciation44,000 6,000 13,000 63,000 Other80,000 18,000 113,000 211,000 4,286,000$ 283,000$ 1,139,000$ 5,708,000$ AnimalManagementServicesand GeneralFundraisingTotalGrants229,000$ 12,000$ -$ 241,000$ Salaries and benefits1,471,000 171,000 451,000 2,093,000 Education and awareness265,000 1,000 113,000 379,000 Occupancy185,000 25,000 75,000 285,000 Professional services664,000 108,000 232,000 1,004,000 Printing111,000 3,000 22,000 136,000 Information technologies83,000 6,000 19,000 108,000 Travel126,000 4,000 8,000 138,000 Depreciation44,000 6,000 18,000 68,000 Other91,000 17,000 101,000 209,000 3,269,000$ 353,000$ 1,039,000$ 4,661,000$ 20XX20XX See accompanying notes.

9 5 2019, Association of International Certified Professional Accountants. All rights reserved. BIG NATIONAL CHARITY, INC. STATEMENTS OF CASH FLOWS INDIRECT METHOD FOR THE YEARS ENDED DECEMBER 31, 20XX AND 20XX INDIRECT METHOD20XX20 XXCASH FLOWS FROM OPERATING ACTIVITIESC hange in net assets538,000$ (724,000)$ Adjustments to reconcile change in net assets to netcash provided by (used in) operating activities:Depreciation63,000 68,000 Donated securities(70,000) (37,000) Net depreciation (appreciation) on investments42,000 (9,000) Decrease (increase) in contributions receivable165,000 (99,000) Decrease in due to/from related parties393,000 303,000 (Increase) decrease in prepaid expenses and other assets(1,000) 7,000 Increase (decrease) in accounts payable and accrued expenses154,000 (73,000) (Decrease) increase in other liabilities(4,000) 1,000 Net cash provided by (used in) operating activities1,280,000 (563,000) CASH FLOWS FROM INVESTING ACTIVITIESP urchase of fixed assets(7,000)

10 - Purchase of investments(1,290,000) (546,000) Proceeds from sales and maturities of investments837,000 79,000 Net cash used in investing activities(460,000) (467,000) Net increase (decrease) in cash and cash equivalents820,000 (1,030,000) Cash and cash equivalents, beginning of year920,000 1,950,000 Cash and cash equivalents, end of year1,740,000$ 920,000$ [NOTE Both the indirect and direct methods are presented. NFP may choose either method of reporting cash flows from operating activities. If the direct method is used, a reconciliation to the indirect method (as illustrated in paragraph 230-10-55-10) may be reported but is not required. 6 See accompanying notes.]