Fund Accounting - Restricted Funds
Fund Accounting - Restricted Funds
Fund Accounting - Restricted Funds
Here again we present the capital fund as it would appear under the deferral method of accounting for contributions. Under the deferral method, current and prior year contributions are deferred and matched against the current amortization of contributed and funded assets.
SpringTime
Capital Fund (Deferral Method)
Trial Balance
December 31, 1999
Dr | Cr | |
---|---|---|
Bank - capital account |
150 |
|
Capital assets - cost | 2000 | |
Accumulated amortization | 800 | |
Bank loan - current portion | 130 | |
Bank loan | 500 | |
Deferred capital contributions | 400 | |
Capital fund - opening balance | 435 | |
Capital contributions recognized | 50 | |
Amortization ($60 relates to funded assets) | 100 | |
Interest expense | 65 | |
2315 | 2315 |
Let us represent the trial balance for the capital fund as a restricted fund, eliminating the deferral of contributions. Under the restricted fund method there will be no revenue to recognize during the year as no capital contributions were received in the year.
SpringTime
Capital Fund (A Restricted Fund)
Trial Balance
December 31, 1999
Dr | Cr | |
---|---|---|
Bank - capital account |
150 |
|
Capital assets - cost | 2000 | |
Accumulated amortization | 800 | |
Bank loan - current portion | 130 | |
Bank loan | 500 | |
Capital fund - opening balance | 885 | |
Capital contributions (received in the year) | - | |
Amortization | 100 | |
Interest expense | 65 | |
2315 | 2315 |
Note that the opening balance in the restricted fund is equal to the opening balance under the deferral method plus the deferred capital contributions and the contributions recognized in the year. This is because under the restricted fund method contributions are recognized immediately resulting in an immediate increase of the fund balance, as the excess of revenues over expenses for the period are immediately impacted by the contribution. Contributions under the deferral method are deferred as a liability, resulting in a lower fund balance as the excess of revenues over expenses for the period will not be impacted until the revenue is recognized.
On the attached page we add the trial balance for the operating fund (still on the deferral method) to the capital fund to create one trial balance for the organization under the restricted fund method.