How should that portion of investment income earned from the investment of endowment contributions that is required to be used to maintain the purchasing power of the endowment be accounted for, if the not-for-profit organization uses the deferred contribution method of accounting?

Question

Quizplus · Accepted Answer

The portion of investment income earned from the investment of endowment contributions that is required to maintain the purchasing power of the endowment is considered a direct increase in net assets. This is because the endowment contributions have already been recognized as revenue and recorded as net assets, and the investment income is simply being used to ensure that the purchasing power of the endowment is maintained over time. As such, it is not considered a deferred contribution or donation revenue.

How Should That Portion of Investment Income Earned from the Investment