A not-for-profit arts organization receives a $300,000 gift from a donor who specifies that the gift must be maintained in perpetuity and that the income from the gift is to be used only to take disabled persons to the theater.How should the entity report the $300,000 gift in the net asset section of its statement of financial position?

Question

Quizplus · Accepted Answer

The donor has specified that the gift must be maintained in perpetuity, meaning that the principal amount cannot be used. Additionally, the income generated from the gift can only be used for taking disabled persons to the theater. This is an example of a permanently restricted gift, as the restriction is specified to last indefinitely.

A Not-For-Profit Arts Organization Receives a $300,000 Gift from a Donor