Adv Gov & Non profit accounting
13-13. Research Case—Unrelated Business Income Tax. (0 L013-3) Phyllis Gene is a certified human resource manager who serves on the board of a local professional association of human resource managers. The association puts on an annual conference for its members at which there are educational workshops and keynote speakers. For the first time, the board is considering setting up an exhibit space for vendors. The board believes that the sale of exhibit space to vendors could result in substantial revenues, which could be used to support the association’s mission. A concern of Ms. Gene’s is whether the revenues generated would be subject to unrelated business income tax. As a result, Ms. Gene has asked your assistance, as an accounting student, in helping determine any tax implications related to the proposal.
Required
a. Create a list of questions to pose to the executive director of the association about the proposed advertising so that the board has all the relevant facts on hand.
b. What resources are available to investigate whether income from advertising is subject to unrelated business income tax?
c. Prepare a memo to Ms. Gene that outlines the key issues and suggest an approach to minimize any tax effects.
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13-14. Research Case—Performance Measures. (61L013-5) Go to the Internet websites of any five of the charitable organizations listed in Illustration 13-8 and search for financial information and performance measures they may disclose on their websites.
Required
a. For the most recent year provided on the organization’s website, calculate the program expense efficiency ratio for each organization (as a percentage of total expenses) as well as the fund-raising ratio [(contributions – fund-raising costs)/contributions]. How do the ratios you calculated compare to the values provided in @Illustration 13-8? b. Select other financial performance measures from GI Illustration 13-7 and calculate those measures.
c. How many years of financial information are provided by each organization? Why is it valuable to have multiple years of financial data available?
d. Prepare a table showing the five charities and the performance measures calculated for each Which charity do you believe has the best financial performance? Why?
e. On what other aspects of performance can NFPs be evaluated’)
