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How earnings impact the net assets of Lifeworks

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Question - Lifeworks is a nongovernment not-for-profit organization that recently received a large gift from a donor in the amount of $3,000,000 in cash. The donor wishes to leave a legacy and therefore specified that Lifeworks cannot spend the $3,000,00 but can invest the $3,000,000 and use any earnings from the investments to support the organization. In the first year, $100,000 was earned but has not been spent. How would the $3,000,000 gift and the $100,000 in earnings impact the net assets of Lifeworks?

a. Both the $3,000,000 and the $100,000 increase the net assets with donor restrictions.

b. The $3,000,000 gift and the $100,000 in earnings would not impact the net assets until the money is spent.

c. The $3,000,000 increases the net assets with donor restrictions and the $100,000 increases the net assets without donor restrictions.

d. Both the $3,000,000 and the $100,000 increase the net assets without donor restrictions.

Reference no: EM132430725

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