Reference no: EM132949042
A private not-for-profit entity receives three large cash donations:
- One gift of $70,000 is restricted by the donor so that it cannot be spent for four years.
- One gift of $90,000 is restricted to pay the salaries of the entity's workers.
- One gift of $120,000 must be held forever with the income to be used to provide food for needy families. In the current year, income of $10,000 was earned but not spent.
Problem 1: What is the increase in the current year in net assets with donor restrictions?
Multiple Choice
Option 1: $190,000
Option 2: $210,000
Option 3: $280,000
Option 4: $290,000
Problem 2: A private not-for-profit university charges student tuition of $1 million for the current year. Financial aid grants total $220,000. The school also receives a $100,000 grant restricted for faculty salaries. Of that amount, $30,000 is spent appropriately this year. In preparing a statement of activities, which of the following is not true?
Multiple Choice
Option 1: Net assets without donor restrictions should show an increase of $30,000 for net assets reclassified.
Option 2: Net assets without donor restrictions should report revenue of $1 million.
Option 3: Net assets without donor restrictions should report expenses of $30,000.
Option 4: Net assets without donor restrictions should report a direct reduction of $220,000 in reporting the tuition revenue.