The following gifts are received in 2016 by a not-for-profit entity:
I.$2,000 specified by the donor to be used to pay salaries.
II.$10,000 specified by the donor for new conference room furniture.
III.$5,000 specified by the donor to be held for one year before being expended.
The salaries are paid in 2017 and the conference room furniture is purchased in 2016. The donor did not specify any time restriction on holding the conference room furniture.
-What amount should be reclassified on the Statement of Activities for 2017 from the Temporarily Restricted column to the Unrestricted column?

Question

Quizplus · Accepted Answer

Only the amount of $5,000 should be reclassified from Temporarily Restricted to Unrestricted in the Statement of Activities for 2017. The $2,000 specified by the donor for salaries should have already been expended in 2017 and therefore should not be reclassified. The $10,000 specified by the donor for new conference room furniture was used to purchase the furniture in 2016 and there was no time restriction, so it should not be reclassified. The $5,000 specified by the donor to be held for one year before being expended becomes available for use in 2017, so it should be reclassified from Temporarily Restricted to Unrestricted. Therefore, the answer is C.

The Following Gifts Are Received in 2016 by a Not-For-Profit