Reference no: EM131190656

Pledges must be distinguished by the extent to which they are restricted. A private college receives the following pledges of support. 1. As part of its annual fund drive, alumni and friends of the college pledge $8 million. The college estimates that about 15 percent of the pledges will prove uncollectible. 2. A CPA firm promises to establish an endowed chair in the accounting department by donating $500,000. The chair agreement will provide that the funds be used to purchase investment grade securities and that the income from the securities be used to supplement the salary of the chair holder and support his or her academic activities. Sundown State University, Fund Balance Sheet (in thousands) Current Loan Endowment Plant Total Assets Cash and temporary investments $18,567 $22,108 $29,611 $10,853 $81,139 Accounts receivable 2,736 45,974 48,710 Inventories 1,990 1,990 Loans to other funds 8,557 6,879 15,436 Land, buildings, and equipment, net of accumulated depreciation 283,181 283,181 Total assets $29,114 $24,844 $36,490 $340,008 $430,456 Liabilities Accounts payable $23,024 $ 1,704 $ 24,728 Loans from other funds $ 32 15,404 15,436 Bonds payable 24,505 188,466 212,971 Total liabilities $23,024 $24,537 $ 0 $205,574 $253,135 Net assets $ 6,090 $ 307 $36,490 $134,434 $177,321 Fund balances Restricted $ 4,102 $20,346 $134,434 $158,882 Designated by the university 1,002 10,000 11,002 Unrestricted 986 $ 307 6,144 0 7,437 Total fund balance $ 6,090 $ 307 $36,490 $134,434 $177,321 3. A private foundation promises to donate $100,000 to be used to support a major revision of the college’s accounting curriculum. 4. An alumnus pledges $25,000 to the college’s loan fund, which is used to make loans to students requiring financial assistance. 5. The college is seeking support for construction of a new athletic field house. A local real estate investor promises to donate ten acres of land on which a field house could be built if the college is able to raise the funds required to construct the building. The land has a market value of $1 million. Indicate the category of net assets (unrestricted, temporarily restricted, or permanently restricted) in which each of the contributions should be recorded and the amount of revenue, if any, that should be recognized when the pledge was made. Briefly explain your response. THIS IS THE WAY QUESTION WAS GIVEN FOR ASSIGNMENT.