Perm Restricted Redemption

[cbrown]

I have a Permanently Restricted Manse Account, 01-1370 which shows the entire current value of the investment. The interest is unrestricted. I also have a Fund Balance account 01-3310-101 which shows the same amount as the asset account. Im thinking this is wrong and the Fund Balance account should only show the amount of Unrestricted Interest accumulation, and the asset account should only show the original Perm Restricted amount. I need to show a partial redemption of $3585.76 against the unrestricted value. Your advice? Thanks.

[cbrown]

I just looked at one of my previous posts and realized that this is close to the same situation. The questions that still remain are:
1. How do changes I make to the fund balance account show up in the asset account?
2. Should the asset account only show the restricted funds and the fund balance account account only show the unrestricted portion?
Thanks.

[NeilZ]

I have a Permanently Restricted Manse Account, 01-1370 which shows the entire current value of the investment. The interest is unrestricted. I also have a Fund Balance account 01-3310-101 which shows the same amount as the asset account. Im thinking this is wrong and the Fund Balance account should only show the amount of Unrestricted Interest accumulation, and the asset account should only show the original Perm Restricted amount. I need to show a partial redemption of $3585.76 against the unrestricted value. Your advice? Thanks.

OK .. you're telling me its a permanent restriction, but then you're also telling me there's a redemption.
I'm assuming that the 'redemption' is actually interest, right?

First off, before we start making any changes, I need more information;

1. Why is the interest, which I'm assuming is sent to you via a check, not being deposited into an unrestricted income account that closes to the standard 01-3110-000 Net Assets/Fund Balance account?

2. What is the Description of the asset account, and does the net assets/fund balance account of 01-3310 have a subaccount of 101?

3. Does the ACCOUNT DETAILS as seen from the chart of accounts for the asset account have the uses restricted money box checked?

[NeilZ]

I just looked at one of my previous posts and realized that this is close to the same situation. The questions that still remain are:
1. How do changes I make to the fund balance account show up in the asset account?
2. Should the asset account only show the restricted funds and the fund balance account account only show the unrestricted portion?
Thanks.

I can't give any answers as I have no information as to how these items were created.

[cbrown]

1. The interest checks are being recorded into an income account 4140, which closes to 01-3110 Unrest Net Income.

2. The asset account 3310-101 is named Manse Fund. There is also 1371-000 Investment Gain/Loss account which closes to 3310-101.

3. Yes.

I am the person who set these accounts up (incorrectly) and can change them with no issues from Session, as long as they are accurately reflecting any activity. I just need to know what the proper PowerChurch setup should be. It seems to me that the asset account should only show the restricted balance (the original corpus) and the income account only record the unrestricted portion.
Thanks.

[NeilZ]

1. The interest checks are being recorded into an income account 4140, which closes to 01-3110 Unrest Net Income.

2. The asset account 3310-101 is named Manse Fund. There is also 1371-000 Investment Gain/Loss account which closes to 3310-101.

3. Yes.

I am the person who set these accounts up (incorrectly) and can change them with no issues from Session, as long as they are accurately reflecting any activity. I just need to know what the proper PowerChurch setup should be. It seems to me that the asset account should only show the restricted balance (the original corpus) and the income account only record the unrestricted portion.
Thanks.

OK since the box is checked for restricted funds, then the fund balance in 3310-101 should reflect the value of the asset, along with any unrealized gain/loss.

If you are indeed making the deposit of interest to the checking and showing the income in 4140, then that's also correct, which is then reflected under the Unrestricted Net Assets.

The setup as you have it is correct.

[cbrown]

Thank you.

[cbrown]

I’ve just re-read this post for the fourth time and realized I gave you a piece of bad information. If you re-read the very first entry, you will see that I have an asset account, 1371. That is the account I was referring to. I have The unrealized gain/loss account closing 1371, not the 3310-101 fund balance account. How does that change your answer?

[NeilZ]

I’ve just re-read this post for the fourth time and realized I gave you a piece of bad information. If you re-read the very first entry, you will see that I have an asset account, 1371. That is the account I was referring to. I have The unrealized gain/loss account closing 1371, not the 3310-101 fund balance account. How does that change your answer?

OK .. now I'm really confused.

Please list all the asset accounts you have currently for this restriction

If it was setup properly you would have something like this

01-1370-000 - Restricted Asset - setup to use restricted money - Reporting Level 5 - Asset #1
01-1371-000 - Unrealized Gain/Loss - setup to use restricted money - this is used to track any gains/losses - Reporting Level 6 - Asset #1

And list the Net Assets/Fund Balance accounts used.

If the setup is correct, you should see a Fund Balance account for the Asset, and a separate Fund Balance account for the Unrealized Gains/Losses

Say:
01-3310-000 - Restricted Net Assets/Fund Balance - Asset #1 -
01-3311-000 - Restricted Net Assets/Fund Balance - Unrealized Gains/Losses - Asset #1

When you created the asset account you should have DEBITed the 1370-000 and CREDITed the 3310-000 the amount of the investment.
When you get a quarterly statement you would then DEBITed the 1371-000 and CREDITed the 3311-000 the amount of the adjustment (using a negative number if needed)

At the end of the year you would "roll up" the unrealized gains/losses to 1370 and 3310. In all cases when you maintain these assets you manually debit or credit the fund balance account.

I made it really easy for us as all our endowments are in a separate endowment fund. All the mutual funds as well as the unrealized gains/losses are listed as assets, but I also update the 3110-000 unrestricted net asset account when we get a quarterly statement. At the end of the year, I roll up the unrealized amounts to its releated mutual fund asset account. I don't need to touch the 3110-000 account it already has the totals of the two accounts. When I redeem any funds, I just credit the mutual fund asset, and debit the checking, again no need to touch the 3110-000 account.

When I transfer funds to operations, all I need to do is a simple transfer transaction from EF checking to 01 checking using transfer accounts.

Now for the restricted asset, I do the same with any gains/losses. Since there would be no 'redemption' as they're permanently restricted, all I do is update that asset and its related fund balance accounts as I remarked at the top ... roll up to the main asset account, and from the 3311 to the 3310. This way the starting 2019 fund balance should each the starting 2019 asset balance on that restricted account.

As you do, any interest we get from that restricted account gets deposited directly into the operations fund account.

[cbrown]

1370 Manse Fund asset account that started with a Restricted amount of $40,000 in 1981. Session placed a restriction on the original corpus amount to be used for future pastor housing. Over the years the interest and unrealized gains/losses have resulted in a total current amount of $126,095. The interest was SUPPOSED to be unrestricted. Legally, since Session was the one that imposed the restriction, it can remove the restriction any time, hence the account should probably listed as a Temporarily Restricted account. Or even maybe Unrestricted.

1371 - Unrealized Gains/Losses - closes to 1370.

3310-101 Manse Fund - Level 5 - Permanently Rest Fund Balance Account $129,827 - this should NOT be a Perm rest account but has been set up that way for many years. I did some research in old records and learned the details of the sale of the old Manse and that there were NO restrictions, other that what was decided by Session.

4140 - Manse Fund Income account Level 5 - closes to 3202-106

4910-101 Manse Fund Release Account closes to 3310-101

4999 release from restrictions

My goal in all this is to correct past errors and manse sure the current Session understands the financials more clearly. Not sure if I should have separate accounts for the corpus and the interest, or just have Session make a decision about identifying it as an unrestricted account. Thanks.

[NeilZ]

1370 Manse Fund asset account that started with a Restricted amount of $40,000 in 1981. Session placed a restriction on the original corpus amount to be used for future pastor housing. Over the years the interest and unrealized gains/losses have resulted in a total current amount of $126,095. The interest was SUPPOSED to be unrestricted. Legally, since Session was the one that imposed the restriction, it can remove the restriction any time, hence the account should probably listed as a Temporarily Restricted account. Or even maybe Unrestricted.

1371 - Unrealized Gains/Losses - closes to 1370. <---- Did you really mean this closes to an asset account? The system doesn't allow that

3310-101 Manse Fund - Level 5 - Permanently Rest Fund Balance Account $129,827 - this should NOT be a Perm rest account but has been set up that way for many years. I did some research in old records and learned the details of the sale of the old Manse and that there were NO restrictions, other that what was decided by Session.

4140 - Manse Fund Income account Level 5 - closes to 3202-106

4910-101 Manse Fund Release Account closes to 3310-101

4999 release from restrictions

My goal in all this is to correct past errors and manse sure the current Session understands the financials more clearly. Not sure if I should have separate accounts for the corpus and the interest, or just have Session make a decision about identifying it as an unrestricted account. Thanks.

FWIW .. if the manse income is unrestricted, it should close to the unrestricted net assets, not to a separate net assets/fund balance account.

I also agree that since it is restricted to any pastor's future housing, I suspect it should be used to help pay the housing allowance, and thus should be Temporary.

[cbrown]

Oops - correct - 1371 does not close to 1370. thx.