Reference no: EM132969788
Question - On January 1, 2020, a non-profit organization, received P1,000,000 cash donation from a donor who stipulated that the amount should be invested indefinitely in revenue producing investment. The deed of donation also provides that the dividend income shall be used for the acquisition of computers of the non-profit organization.
On December 31, 2020, the non-profit organization received P100,000 cash as dividend income from the investment of the fund.
On January 1, 2021, the non-profit organization acquired a computer at a cost of P20,000 with a useful life of 5 years without residual value.
In the statement of activities of the statement the NPO for the year ended December 31, 2020, which of the following is the proper effect of the transactions?
A. Increase in temporarily restricted net assets by P100,000.
B. Increase in unrestricted net assets by P10,000,000.
C. Increase in unrestricted net assets by P16,000.
D. Decrease in temporarily restricted net assets by P20,000.