Question

Distinguish between the accounting treatment of time-restricted pledges by private and public sector colleges and universities.

Answer 1

Factors	Private College/University	Public sector college/ University
Adherence	-should adhere to the financial reporting standards by FASB (Financial Accounting Standards Board)	-should adhere to financial reporting standards established by GASB (Government Accounting Standards Board)
Basis of accounting	-Use the accrual basis of accounting	Use both cash accounting and accrual accounting
Model	-should report the changes in the unrestricted, temporarily restricted and permanently restricted net assets of the colleges as a whole ie. One big total.	-Follow the model of the public institutions that are engaged in business type activities. However some models use both business type activities and governmental activities.
Student loans (cash contribution) Reporting	Temporarily Restricted net asset wherein the assets are treated in a special way (restricted) as mentioned by the donor.	Restricted net position wherein it consists of the restricted assets minus liabilities and deferred inflow of resources pertaining to that particular asset.
Student loans (designated by board)	Unrestricted, designated net assets – Since the donor is not involved in this activity, the designated asset is reported as unrestricted net assets.	Unrestricted and designated net position – is the amount of assets deferred by the outflow and inflow of resources, liabilities. The deferred inflows of resource are not included while calculating the total investment of the whole capital asset.