Question

A not-for-profit (NFP) organization acting as a financial intermediary receives a contribution. Under the FASB Codificationthe NFP would be most likely to recognize the contribution as a liability under which of the following situations?
A. The NFP has variance power.
B. The NFP is acting as an agent, receiving the contribution on behalf of another organization.
C. The NFP is financially interrelated with the organization on whose behalf it received the contribution.
D. The NFP is controlled by the organization on whose behalf it received the contribution.

Answer 1

Answer:

B. The NFP is acting as an agent, receiving the contribution on behalf of another organization.

Explanation:

When the Not for profit organization acts as an intermediary then it would record the contribution it received from some organisation towards some different third organisation.

As the amount does not belong to Not for Profit organisation, and then it needs to further pay such amount to different party or organisation to which it belongs, and on behalf of which the Not for Profit organisation collected such amount.