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Question 20 A donor contributed $100,000 in cash to Goodwill Industries in 2020. The donor specified...

Question 20

  1. A donor contributed $100,000 in cash to Goodwill Industries in 2020. The donor specified that the contribution be held as a permanent endowment, and income from investment of the contribution be used for job training programs. Goodwill Industries invested the $100,000 in securities in 2020. During 2021, investment income of $3,000 was received in cash, and $2,500 was used for job training programs.

    How does Goodwill Industries report this on its 2021 statement of activities?

    A.

    $3,000 investment income increases net assets without donor restrictions; $2,500 expense reduces net assets with donor restrictions.
    B.

    $3,000 investment income increases net assets with donor restrictions; $3,000 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.
    C.

    $3,000 investment income increases net assets without donor restrictions; $2,500 expense decreases net assets without donor restrictions.
    D.

    $3,000 investment income increases net assets with donor restrictions; $2,500 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.

Solutions

Expert Solution

Ans:

A donation received to spend the earned income on special training program. During the year $3,000 was earned from the investment. This amount is to be added to net assets with donor restriction tag. Out of which $2,500 is to be released and spended on the Training program specified. which will reduce the restricted asset by $2,500.

So the correct answer is option D.

  • $3,000 investment income increases net assets with donor restrictions; $2,500 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.

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ekkarill92 answered 2 years ago
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