The Medical Arts Clinic, a well-established health care organization, received a $1,500,000 pledge in fiscal year 2012 that was restricted to cover operating expenses.The gift was received over two years; $600,000 in the first year and $900,000 in the second year.The following table reflects the funds received as well as the amount spent on operating the clinic. $$\begin{array} { l c c }
& \text { June 30,2012 } & \text { June 30, 2013 } \
\text { Gifts received } & \$ 600,000 & \$ 900,000 \
\text { Clinic operating expenses } & \$ 40,000 & \$ 1,020,000
\end{array}$$ What should the clinic report as Net Assets Released from Restrictions on the statement of activities for the fiscal year ended

Question

The Medical Arts Clinic, a well-established health care organization, received a $1,500,000 pledge in fiscal year 2012 that was restricted to cover operating expenses.The gift was received over two years; $600,000 in the first year and $900,000 in the second year.The following table reflects the funds received as well as the amount spent on operating the clinic. $$\begin{array} { l c c } 
& \text { June 30,2012 } & \text { June 30, 2013 } \
\text { Gifts received } & \$ 600,000 & \$ 900,000 \
\text { Clinic operating expenses } & \$ 40,000 & \$ 1,020,000
\end{array}$$ What should the clinic report as Net Assets Released from Restrictions on the statement of activities for the fiscal year ended

Quizplus · Accepted Answer

The clinic should report $960,000 as Net Assets Released from Restrictions on the statement of activities for the fiscal year ended. This is because the clinic received $1,500,000 in restricted gifts over two years and spent $1,020,000 on operating expenses. Therefore, the remaining $480,000 ($1,500,000 - $1,020,000) of the restricted gifts was released from restrictions and can now be used for any purpose.

The Medical Arts Clinic, a Well-Established Health Care Organization, Received