 In this presentation, we'll take a look at a donor pledge that is restricted for the use of a construction project. Get ready, because here we go with zero. Here we are in our not-for-profit organization dashboard. We're first going to take a look at our Excel worksheet to see what our objective will be. So within our Excel worksheet, we're on the six tabs, we're on tab six, and we're taking a look at item four, which says there's a donor pledge for construction project of the 109-100, and the project life is going to be five years. The project starts two years from now. The discounted value is going to be 96-160. Alright, so let's break this down. So someone's pledging to give us money. We're a charitable donation. We're a charity. There's going to be a donation that's pledged for us. They're pledging to give us 109-100, but restricting it to the use of a construction project, a long-term project that's going to take five years, and the project is not even scheduled to start for two years from today, which means we're not going to get the pledge possibly until that time, or at least not be able to use the money until that time, and that means that we need to discount the money that we're going to get. So we're going to put it on the books at the 109-100, but really by the time we get to actually get it and or use it, it's going to be discounted for two years from now. So we have to use the time value of money and say, well, that means that it's not really worth 109,100 if we're not going to get it until the future. So the present value, based on our discount rate calculation, which I'm not going to get into how to discount it, but basically we would use the present value calculation, would be the 96-160. So we want to put this on the books and we want to achieve a few different things here. We want to say, okay, this is how much they pledged for us. That's how much they say they're going to give us. We want to track that and make sure that we can collect on that or try to collect on it in the future for the full amount of 109-100. But we also want to show our readers at this point in time that look, it's not really worth 109-100 because we're not going to get it for a couple of years and we had to discount it. So really the value of it is only the 96-160 based on the present value calculation that we have. Therefore, how are we going to do that? Let's take a look at our transaction down here. We want to increase the receivable by the full 109-100 because we want to be collecting from these people. We want to collect the full amount. But we're only going to put it an increase to basically the revenue with restrictions because it's restricted because the donor put a restriction that it can't be used other than for the construction project. So we're going to put it on the books but we're only going to put it on the books at the 96-160 which is the value of the donation because it's discounted. So that's the only value that we're going to get and therefore the difference 12,940 the difference between the 109-100 and the 96-160 is going to be for a discount on the contribution. That's actually going to be a contra-asset account. So if we take a look at this, then that means the AR accounts receivable is going to go up by the 109-100 and then we have this discount, which is kind of like the allowance account. It's going to be a discount on it. We're going to say, hey look, we got 109-100 but really the value of it is only the net of this contra-asset account which is the 96-160. And then down here, we're increasing, that's an increase with the credit, the income by the 96-160 and also of course we want to be able to break this out because it went into the restricted items. We want to break it out into the restricted items or statement of our activities or income statement. It should be going to the item with donor restrictions and then we could further break that out in our worksheet that we made in zero breaking out the types of restrictions that we have. Okay, so that's a lot to enter here, a lot going on. So let's go on into, let's go back to our transaction and then let's go into zero and see how this will work. So let's go back into zero here. Now we're going to do this with like an invoice type of form but before we do that, we're going to need to have a category for the restricted items. We have a new restricted item which is going to be like a long-term project. So let's first set up that category. To do that, we're going to go to the account, to the dropdown up top. In the not-for-profit dropdown here, we're going to go into the settings. So let's go into the settings and then within the settings, we're going to scroll all the way down to the bottom where it says, hey, you're looking for the advanced settings. I'm paraphrasing and we're like, yep, looking for the advanced settings. So we're going to be clicking on that. And then we want to go to the tracking categories. We want to be going to the tracking of the categories. And then we have the unrestricted and the restricted. So we're going on over to the restricted tab. Now we want to be on the restricted tab and I want to add a new restricted item for like a long-term project. Now in practice, of course, we would be specific on what the long-term project was for. We might have multiple long-term projects but I'm just going to call it generically here, long-term project. So we're going to say restriction long-term project. You know, it'd be like a capital project, long-term capital project. All right. So then I'm going to say save. So now we have a new category that we can then use when we create our invoice or pledge form. So now I'm going to select the dropdown. I'm sorry. I'm going to go select this dropdown, the little plus dropdown. We're going to go into our invoice so we can record this transaction. So we'll go into our invoice. Now this is our modified invoice. So it says invoice up here, but we're going to make it not the standard invoice, but the pledge invoice, which means it'll say pledge on it, at least when we give it to somebody. I'm going to hold down control and scroll down a bit because I think I want to get it to the 100%. That looks good. And then I'm going to say this is two. We're going to say pledger two. Now we're imagining, of course, this is the name of the person that pledged money, pledger two. This is going to be happening, let's say, on the 7th. So I'm going to select the dropdown. We're going to bring it on back to January. Bring it on back to January 7th. So January 7th, the due date then would be February 7th. We're going to say, so we'll say February 7th, although we said the due date isn't going to be for possibly two years until, but I'm just going to put that for the purposes of our form here. And then we're going to say the, obviously again, the due date was two years out. So whatever the terms are that they give us, they might have special or unusual terms for this particular pledge, but I'll keep it there. Reference number. And again, we're not using the standard form. I thought I changed this already. It should be the pledge form. So pledge form. And then we're going to go down. Now I can use the standard pledge item, which is going to be pledge, right? I'm going to say pledge and the standard pledge item. If I, if I choose that, we'll be going to the restricted account. So that was, so it's the same pledge item here that we would use normally. However, the amount is going to be for the discounted amount. Cause this is going to be the amount that's going to be increasing income. The 96, 160. So we're going to say 96, 160 there. 96, 160. And then we have restricted. So unrestricted. It's going to be restricted. I'm going to put it into the restricted column. And we're going to say it's going to be the restricted column of the long-term project. All right. And then we're also going to have a discount. So I'm going to just record it here. Discount has an I in it, not an E. And then the discount is going to be for the amount of that 12,940. 12,940. So I'll say this is going to be for 12,940. And then tab, tab, tab, tab. Now we shouldn't need an item here for, or a class for classification for the unrestricted or restricted here because the discount is going to be going to a contra, a contra asset account, which we're going to have to set up here. So notice I put the discount and defaulted to our primary sales account, the 4,000. What we wanted to go to here is going to be a contra asset account, which we almost certainly don't have set up at this point in time. So what we want it to be is going to discount on contributions receivable. Let's go ahead and copy that, that name. See if I could put that name here. It's going to be this name. I'm going to copy that. And then where do we want to put it? We want to put it on the number, number wise, we want to put it like at the 12, we'll make it 1250, let's say. So I'm going to go back up top. I'm going to add a new account here. We're going to add a new account. We're going to create accounts and accounts 1250. And then the account type, now we can't, I'm not going to make it an accounts receivable account because this is a contra account. So I've got to put it as basically other assets. So I'm just going to call it a current asset account. So we'll say current asset type of account name. I'm going to put that long name that we had discount on contributions receivable or accounts receivable since whichever you want. And that's going to be the name. So we're going to say set that up. So there we have it. So there's where it is going. Okay. So what's this going to do now when we record it? Well, it's basically an invoice or pledge form. Therefore it's going to be increasing the accounts receivable. The accounts receivable is going to go up by the total amount, which is the 109.100. Then it's going to be increasing the revenue for the restricted contributions revenue kind of account, which is the 96.160 for that amount. And then it's going to be decreasing basically the accounts receivable with a contra with a separate account, contra asset account by the 12,940. All right. Let's check it out. So let's say approve this, approve. And then we got this green thing, which means we did it. Okay. I think. And then so what I'm going to do is I'm going to then open up our reports. Let's open up the balance sheet first. Let's go to the accounting dropdown. I'm going to open up these reports, these three reports. And then we're going to go through and now analyze them. Actually, we'll open up all four of these. And then we'll go back into it. So I'm going to open the balance sheet up first balance sheet and we'll change the date up top, the date being to 2020. So January 31st, 2020. Then I'm going to go back up top, right click on that tab and duplicate that tab, then go back to the tab to the left. We're going to do the same thing with the income statement, hitting the accounting dropdown. We're going to go down to the standard income statement. Let's first take a look at that standard income statement. Once open, we're going to be duplicating this tab as well. And then we'll come back and analyze the report. So we're going to right click on the tab up top, duplicate that tab. Then I'm going to go back to the tab to the left. And let's do this again. This time going to our income statement worksheet. Going down to the income statement worksheet. Now we made this in a prior presentation. If you weren't there for that, you might want to go back and take a look at it. It was an excellent, excellent time that we had there. We in essence customized the income statement to break out the restricted items and the unrestricted items. So we'll take a look at that. Then I'm going to right click on this again, right click on this tab, duplicate this tab. And we'll do this one more time. And we're going to open up, going back to the tab to the left, open up our accounting dropdown. Now we want the restricted items. Again, another custom report. Another great time we had putting that together in a prior presentation. So if you missed that, take a look at it. Basically, we're breaking out just the restricted items for this one. All right. Now let's analyze it. If we go back to the balance sheet, I'm going to hold down control, scroll up to get to that one, two, five. Looks like I'm already there. I want the one, two, five percent. And we're in 2020. So that looks good. So what happened here is the accounts receivable accounts receivable should be going up. If I go into the accounts receivable, let's see the activity. So here it is. And it went up for the full amount, the full amount of the 109s. The accounts receivable went up for that full amount 109 100. And then if I go back, we had to somehow discount the fact that it's not really valued at that amount because we don't expect to be able to see it and or use it until some future dates. So we had then our other account, which is a Contra, a Contra asset account at the 12,940. So in essence, you're telling the reader, Hey, look, this is how much we expect to collect, but we think the value of it is going to be reduced by the 12,940 for whatever reason. In this case, because of the time value of money. And then so the difference between those two is what we actually expect to collect. Then on the other side on the income statement, we're going to have the income that's going to be going into the restricted income. So the restricted income should now be increasing. Let's go into that 204 160 the 204 160 restricted income. That goes up by the 96 160, which is the discounted amount, the discounted value that we had due to the time value of money. Note that we broke out the restricted and the unrestricted in these two or three categories. So the restricted category is now this 204. So if I take the 204 160 and the grants are also restricted and I pull up my giant calculator here and make it a little bit smaller and then say that we take the 204 160 and the 159,000 that's going to be the 363. So we broke it out in multiple accounts here and then we want to see it in a side by side fashion. So if I go then to the income statement worksheet, now we have the unrestricted and then the restricted broken out into its own column. Now you could see this report doesn't quite tie out here because the 204 160 doesn't sum up these two accounts. Why? Because we added a new classification. So we're going to have to modify this report every time we add a new classification, which doesn't happen all that often, but we did here. So we added a classification. Therefore we're going to have to customize this report. We're going to go to the edit layout on the bottom left hand side. We want to then go into the restricted items column, restricted items column, and then I'm going to move the calculator because I want to keep that number there. So I'm going to go back up top and I'm going to select the dropdown. Here's the new item we added the long term project. So that should be included in the restricted items. So then I'm going to say, all right, that's good. Let's say done. So we have saved that. And then I'm going to move the trustee calculator back to the right, keeping it as out of the way as possible, scrolling back down. So now we have the 363 160. So there's the 363 160 in the restricted column that matches the categories we looked at last time, which is basically this plus this, right? And then if we want to then break out the restricted items, then we can go to the first tab, which we're going to have to modify again because we had we added a restricted item. So now we go here. And so now we have government grants. We've got the time restriction. What we don't have is the long term project. So I need to add another column here to tie out the long term project. So I'm going to say, all right, let's edit this one and add another column to it for the long term call long term project restriction. So I'm going to hold down control, scroll down just a bit back down to that 100%. We're going to be adding a column up top. Let's add a column. It's going to be a restricted item column restricted item. We're then going to select the dropdown over here. And I'm going to say this one's going to be for the long term project, long term project. That's the one we want. And then I'm going to change the name. I'm going to double click on the name. I'm going to get rid of the dates. So we just have the name then because we don't need the date just the name. And then I want to take this whole thing, grab it and pull it to the left so the total is on the right because I want the total like on the far right side. So I'm going to hold this left clicking it and drag it here. So now we have the government education, the time, and then the long term projects. So that should be good. Let's go ahead and say done on that one. See what that does. Actually, I know what it's going to do. So here we have it. So now we have the government. We got the time and then the long and then the long term project. Now notice the total column isn't adding up these two. So it's not being included in the total column over here. All right. So let's adjust this again. I'm going to say edit this. The total column needs to be adjusted. So I'm going to go into the total column. So remember the total column is independent of the other two. Now you could create a total column in another format, which would be a formula of these two. So maybe I'll take a look at that. But in any case, if I select the dropdown, then I can create another one to pick up the long term project. So notice the total column isn't summing up these three columns in this case. It's then using the restricted items. And so therefore to double check this, you'd want to sum up this way and make sure the total column then ties out to it. Now, if you wanted to do an algebraic total column, which might be a good thing to have with our worksheet here, then you could add another one. Say I want another column and I want to use formulas for the column. And then I can add a formula and I'd say, hey, I'd like to take this column. I'm sorry. Let's go back to the formula column. And I'd like to say that we want to insert the government grants plus and I could use the formula here say plus and then I want to pick up the time. And then I want to say plus and then I want to pick up the long term projects and then say plus. And then that's it. That's all I want to pick up. I don't want that last plus. And so that that's a way that we can have a total column here. That's a formula. So I'll say this is total formula and that can give us kind of a double check. This total column should be summing it all up and this should give us the formula. The total columns should be the same. They're calculated two different ways. So let's go ahead and do that. Let's say save or done. And then if we scroll down, then now we've got the these items totaling up over here. So that looks correct. And again, the total, these two total columns can kind of give us a double check. And that might be something we want to do on our other worksheet as well because that double calculation can kind of help us. So remember, we're going to have two reports then. This report will be the worksheet. We'll call this restricted item worksheet. And then we'll have another report, which will basically be the restricted items. That that'll be our final report. We won't have the double check numbers over here. We'll just have the one total column. Okay. So let's save this. I'm going to say save. So I'm going to save this now. I'm not going to change the name here. I'm just going to keep it as the restricted items. So I'm going to keep this as restricted items. I'm going to say save. Because we've updated this report. Then I'm going to go to the end and just note that of course this restricted item column ties out to this three, six, three, one, 60. If I go to our income statement worksheet, that should tie out to the three, six, three, one, 60. So and here, I'm sorry. Here is where we're really looking. Three, six, three, one, 60 of the restricted items, then being broken out by the three restricted items within it. So let's go ahead and save this report. So I'm going to say customize. Let's save that report. And then I'm going to go back to the first tab, right click on it. I'm going to duplicate this tab. Go back to the tab to the left. I just want to take a look at our custom reports. I'm going to go to the accounting dropdown and just take a look at our custom reports going into our report center. And then going into the custom reports, the custom reports we've been working with. So here's the two of them. Now this restricted items. I'd like to make this like, I'd like to rename it. I want to rename this. I'm going to call it restricted items worksheet. So that then we can make a final report that, that, that won't have two total columns on it. So that's what we'll have. And we'll do that at a later point. So now if we look at our favorite reports now, once again, we still have the balance sheet. We got the income statement. We got the income statement worksheet, which breaks out restricted and unrestricted. Then we have the restricted items, which further breaks out those restricted items into the categories of restriction. And then we're going to give one more later on, which will have the unrestricted items that we'll do at a later point. That's going to be it for now. Let's get out of here.