Contributions received in a prior period and restricted by the donor for construction of a building were reported as increases to net assets with donor restrictions in the period received. When the building is constructed in a subsequent period a not-for-profit would report contributions for the amount released from restrictions.

Question

Quizplus · Accepted Answer

Contributions restricted for the construction of a building should be reported as liabilities until the building is constructed. Once the building is constructed, the restricted funds should be released and reported as an increase to net assets with donor restrictions. Therefore, the contributions should not have been reported as increases to net assets in the prior period.

Contributions Received in a Prior Period and Restricted by the Donor