The Friends of the Library (FOL), a not-for-profit entity, received a gift restricted to the acquisition of a special piece of equipment used to restore books. Late last year FOL acquired the machine at a total cost of $19,000. The machine is estimated to have a useful life of eight years and a salvage value of $3,000. In what fund should FOL make the entry to record the depreciation for the current year?

Question

Quizplus · Accepted Answer

Depreciation on assets purchased with restricted funds is recorded in the unrestricted fund because, over time, the use of the asset fulfills the restriction, effectively releasing the funds from restriction.

The Friends of the Library (FOL), a Not-For-Profit Entity, Received