A donor gave equipment valued at $50,000 at the beginning of 2012 to a private not-for-profit organization.The equipment had a 10-year life and depreciation of $5,000 was charged during 2012.At the end of the year,the net assets to be reported in unrestricted net assets related to this equipment would be:

Question

Quizplus · Accepted Answer

The net assets to be reported in unrestricted net assets related to this equipment would either be $45,000 or $0, depending upon the policy of the organization.

If the organization has a policy of fully depreciating donated assets in the year of receipt, then the net assets related to this equipment would be $0.

However, if the organization has a policy of amortizing the donated asset over its useful life, then the net assets related to this equipment would be $45,000 ($50,000 - $5,000 depreciation charged during the year).

A Donor Gave Equipment Valued at $50,000 at the Beginning