Download Capital Entity Procedures

Archdiocese of Denver
Office of Parish Finance
Parish Accounting Guide
Capital Entity Procedures
The Capital Entity allows the parish to account for Capital Project fundraising monies including
unrestricted, designated and temporarily restricted funds as well as to account for real property
purchase or construction costs. This entity allows the parish to track capital funds separately from
operating activity. Unrestricted funds are funds from various sources that can be used in any manner by
the parish in accordance with its tax exempt purpose. Designated funds are unrestricted funds that the
Pastor has agreed to set aside for a specific purpose, for example a capital building project. Designated
funds can be re-purposed with the Pastor’s approval. Temporarily restricted funds are donated funds
that have been restricted as to purpose or time by the donor. In accepting donor restricted funds, the
parish promises to comply with the donor’s intent. Any other use requires specific permission from the
donor.
The Capital Entity is the only entity with capital and construction expense accounts (6000 series).
These accounts allow the parish to budget for and monitor large capital expenditures. Please refer to
the Parish Accounting Guide “Capitalization Procedures in ConnectNow” for information on how to
record the purchase of capital assets not associated with a large capital project.
The Capital entity also allows Designated and Temporarily Restricted funds to be “released” to the
General entity once the designated or restricted purpose is met, i.e., the funds are expended for the
capital project. This will occur when the project is complete, usually at the time the Certificate of
Occupancy (CO) is issued.
Activate Capital Project Entity accounts– In Accounts, select Chart of Accounts (Add Sub-Account) and
search on the capital entity you wish to set up. This entity is available as a General, Cemetery or QuasiParish related All accounts that are available in this entity will be listed. Activate those that you will
need from the following (account numbers shown below are for the general capital entity as an
example):








1003.00CAP-1042.00CAP
Current Capital Unrestricted or Designated
Cash/Checking/Savings/ Investment Account - if the funds are maintained in a separate (capital
purpose) bank or investment account
1067.00CAP-1072.00CAP
Current Capital Restricted Savings or Investments
1200.00CAP
Due To/From Other Entities – IMPORTANT NOTE: Go to Set
Up/Due To/From Accounts and assign this account to the Capital entity.
1218.00CAP
Pledges Receivable
1250.00CAP-1262.00CAP
Long Term Capital Unrestricted or Designated Savings or
Investment accounts
1282.00CAP-1292.00CAP
Long Term Capital Restricted Savings or Investment accounts
1350.00CAP-1351.00CAP
Construction in Progress to hold construction costs incurred in
one fiscal year when the project will not be completed until the following fiscal year.
2031.00CAP
Accounts Payable - if the funds are maintained in a separate
capital bank account (mark the accounts payable box).
June 6, 2014
Capital Entity Procedures
Page 1 of 4
Archdiocese of Denver
Office of Parish Finance
Parish Accounting Guide










Capital Entity Procedures
2903.00CAP
GEN Capital Project Net Assets
3600.00CAPCAP-3629.00CAPCAP Unrestricted/Designated Capital Income accounts
3600.00CAPCAP-3639.00CAPCAP Restricted Capital Income accounts
3640.00CAPCAP-3672.00CAPCAP (Contra Income) Transfer from Capital to release any
remaining capital funds to the General entity once construction is complete and the asset is
capitalized on the Statement of Financial Position.
4080.00CAPCAP-4552.00CAPCAP Salary and Benefit Expense, if personnel costs are directly
attributable or allocable to the Capital project. These accounts are intended for personnel costs
that are not capitalized into the total capital asset.
6020.00CAPCAP-6075.00CAPCAP Operating Expenses, if operating costs are directly attributable
or allocable to the Capital project. These accounts are intended for operating costs that are not
capitalized into the total capital asset.
6101.00CAPCAP-6181.00CAPCAP Capital costs that will be capitalized on the Statement of
Financial Position once the construction project is complete.
6200.00CAPCAP-6207.00CAPCAP Construction costs that will be capitalized on the Statement of
Financial Position once the construction project is complete.
3017.00GENCHU
Transfer from Capital Campaign is used in association with the
3640.00CAPCAP account to transfer any remaining capital funds to the General entity once the
capital project is complete. Also available in other General entity departments.
5099.00GENCHU
Transfer Unrestricted to Capital Fund is used in association with
the 3629.00CAPCAP account [Internal Capital Transfer from Unrestricted Cash] to transfer
unrestricted or designated funds from the General entity to the Capital entity to reflect those
funds as intended for capital project purposes.
Capital Entity Cash Flow – The Capital entity is intended to show the receipt of capital funds from
various sources (including internal entity transfers) and the disbursement of those funds for capital or
construction costs. Therefore Capital entity designated and/or temporarily restricted funds will be
treated differently than those of the Designated and Temporarily Restricted entities. The Capital entity
funds will not be released to the General entity during the construction phase, and then only if there are
funds remaining in the Capital entity when the project is complete (as previously noted, when a CO is
issued). As always, it is presumed that construction costs are expended from donor restricted funds
before expending unrestricted/designated funds so that any remaining funds will less likely be restricted
funds. If the Pastor wishes to designate these remaining funds for future repairs and maintenance of
the asset, the remaining funds should be transferred from the Capital entity to the Designated entity. If
the remaining funds are not specifically designated, they should be transferred from the Capital entity to
the General entity. It will be rare to leave the remaining funds in the Capital entity once the project is
complete, unless the parish is planning a phased capital project and future construction will be
scheduled.
June 6, 2014
Capital Entity Procedures
Page 2 of 4
Archdiocese of Denver
Office of Parish Finance
Parish Accounting Guide
Capital Entity Procedures
Capital Entity Pledges Receivable –Under the modified accrual basis of accounting the parish will now be
required to record pledges receivable for a capital project. However, only record a receivable if a donorsigned pledge card has been received indicating a promise to make one or more payments to donate for
the capital project in the future.
Capital Funds Held in the General Entity – If capital funds are not separately held in a capital cash,
savings or investment account, the Due To/From feature of the ConnectNow accounting system will
automatically record inter-entity receivable/payable entries when funds cross entity borders, i.e., funds
held in the General (GEN) entity bank accounts are deposited to or expended from Capital (CAP) entity
income or expense accounts. The Capital entity Due To/From account balance should represent the
amount of funds held in other entities’ cash accounts and should show a positive, or receivable, balance.
Capital Funds Held in the Capital Entity – Capital activity will only be recorded in Capital entity asset,
liability, income and expense accounts. No Due To/From activity will occur when the transactions do
not cross entity borders.
Capital Transaction Examples - The following examples reflect how to record Capital entity transactions
when cash is held in the Capital entity bank account(s).
1. The parish receives pledge cards totaling $500,000. Deposits
Debit 1218.00CAP
Credit 3630.00CAPCAP
Pledges Receivable
CAP Restricted Gifts
$500,000
$500,000
2. The parish receives pledge payments in the amount of $20,000. Deposits
Debit 1067.00CAP
Credit 1218.00CAP
Restricted Savings
Pledges Receivable
$20,000
$20,000
3. The parish receives an unrestricted donation of $10,000 and the Pastor puts to toward the
capital project. Deposits
Debit 1003.00CAP
Credit 3600.00CAPCAP
Cash Checking Account
Gifts and Bequests
$10,000
$10,000
4. The parish holds a fundraising event to benefit the capital project. The event grosses $12,000,
offsetting costs are $7,000, netting $5,000 Deposit and Check
Debit
Credit
Debit
Credit
June 6, 2014
1003.00CAP
3610.00CAPCAP
3613.00CAPCAP
1003.00CAP
Cash Checking Account
Fundraising Income
Fundraising Cost
Cash Checking Account
Capital Entity Procedures
$12,000
$12,000
$7,000
$7,000
Page 3 of 4
Archdiocese of Denver
Office of Parish Finance
Parish Accounting Guide
Capital Entity Procedures
5. The Pastor designates $30,000 of parish unrestricted [General] savings for the capital project.
Deposit and Withdrawal
Debit
Credit
Debit
Credit
1003.00CAP
3629.00CAPCAP
5099.00GENCHU
1015.00GEN
Cash Checking Account
CAP Internal Transfer from Unrestricted Cash
Transfer Unrestricted to Capital Fund
Savings
$30,000
$30,000
$30,000
$30,000
6. The parish pays $500 for printing and copying for capital project fundraising brochures. Check
Debit 6028.00CAPCAP
Credit 1003.00CAP
Printing Copying
Cash Checking Account
$500
$500
7. The parish purchases furnishings in the amount of $15,000 for the capital project. Check
Debit 6160.00CAPCAP
Credit 1003.00CAP
Furnishings & Fixtures
Cash Checking Account
$15,000
$15,000
8. The parish processes the first construction draw from the capital savings account. Check
Debit 6200.00CAPCAP
Credit 1014.00CAP
Construction Contractor
Revolving Fund Savings
$15,000
$15,000
9. The fiscal year end arrives and the capital project is not yet complete. The parish has expended
$400,000 in capital costs (do not include capital operating costs like printing/copying). The
parish capitalizes the construction costs in Construction in Progress. Journal
Debit 1350.00CAP
Credit 6200.00CAPCAP
Construction in Progress
Construction Contractor
$400,000
$400,000
10. The parish completes the construction project. The total cost is $1,000,000. Journal
Debit 1370.00GEN
Credit 1350.00CAP
Credit 6200.00CAPCAP
Building
Construction in Progress
Construction Contractor
$1,000,000
$400,000
$600,000
11. $25,000 remains in the capital entity when the capital project is complete. The Pastor does not
designate these funds and they are returned to the General entity. Deposit and Withdrawal
Debit
Credit
Debit
Credit
June 6, 2014
1015.00GEN
3017.00GENCHU
3641.00CAPCAP
1003.00CAP
Savings
Transfer from Capital Campaign
Transfer Capital to Church
Cash Checking Account
Capital Entity Procedures
$25,000
$25,000
$25,000
$25,000
Page 4 of 4