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Accounting Tutorial › Without Fund Accounting

Here we will record the journal entries for SpringTime’s capital assets, and related capital contributions.

As SpringTime’s revenues are below $500,000, it need not record the capital assets in its statements, and may instead provide certain note disclosure (CICA Handbook 4430.03,.40). But SpringTime’s contributors like to see capital assets on the balance sheet, so capital assets are recorded.

During the year, SpringTime was given a desk with a fair value of $200. Amortization expense for the year amounted to $110, of which $60 related to contributed or funded assets.

Contributed capital assets should be recorded at their fair value so long as fair value can be reasonably estimated (4410.19). We therefore make the following entry to record the contribution of the desk:

  dr cr
Capital assets 200  
Deferred Capital contributions   200

No amount is recorded as revenue on receipt of the asset because SpringTime has no restricted funds and is therefore following the deferral method of recognizing contributions. (Revenues of restricted funds are recognized when received or receivable.) Under the deferral method, revenue is only recognized when the related expense is incurred. In the case of capital assets the expense is amortization.

The amortization expense for capital assets in 2000 was $110, of which $60 related to contributed and funded capital assets. We need to record the amortization of the assets and recognize the contributions matching the amortization of funded assets, recognizing capital contributions previously deferred:

  dr cr
Amortization 110  
Accumulated amortization   110
Deferred capital contributions 60  
Capital contributions recognized   60

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