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In: Accounting

A donor pledges $100,000 to the Shakespeare Foundation to be used only to support the summer...

A donor pledges $100,000 to the Shakespeare Foundation to be used only to support the summer Shakespeare Theater—an event that has been held every summer for 38 years. This is an example of a A. Conditional Contribution. B. Contributions with donor restrictions. C. Contributions with no donor restrictions. D. A decrease in net assets.

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Expert Solution

Given, Adonor pledges $100,000 to the shakespeare foundation to be used only to support the summer shakespeare theater, an event that has been held every summer for 38 years

A. Conditional contribution: If the contribution is made upon the condition. It means if the condition is satisfied then only the contribution will be made. In the given situation there is no such condition is made . Hence the Option is incorrect

B. Contributions with donor restrictions: The donor contributes the funds on the restriction that the fund should be used only faor a specific purpose. In this situation, donor pledges to contribute which isto be used only to support shakeseare theatre which is a restriction for the use of funds. Hence Option B is correct

C. Contributions with no donor restrictions: If the donor contributes withot any restriction on the use of funds, it is said to be contributions with no estrictions. But, here donor pledges to contribute with restriction and hence this option is incorrect.

D. A decrease in net assets: A contribution to pledge does not result a decrease in net assets. Hence the option is incorrect.

ekkarill92 answered 2 years ago
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