[Jade CPA-to-be]

in year 1, Gamma, a not-for-profit organization, deposited at a bank $1,000,000 given to it by a donor to purchase endowment securities. The principle of this contribution is not to be spent according to the donor’s restrictions. The securites were purchased January, Year 2. At December 31, Year 1, the bank recorded $2000 interest on the deposit. In accordance with the bequest, this $2000 was used to finance ongoing program expenses in March Year 2. At december 31, Year 1, what amount of the bank balance should be included as current assets in Gramma’s classified balance sheet?

a $0

b $2000

c $1,000,000

d $1,002,000

the answer is b. I think $2000 should be under “unrestricted net assets” since it will be used for ongoig program expenses. Why it relates to current asset?

for NFP, I am confused about same components of unrestricted, temporarily restricted & permanently restricted under NET ASSETS & REVENUE, GAIN AND OTHER SUPPORT? Can anyone explain?

thanks in advance

CPA Licensed in California- Class of 2013

[jags2899]

Yes, unrestricted assets do relate to current assets because they can be spent for ongoing program expenses within the current period. The $1,000,000 would be a permanently restricted asset which would be non-current because it cannot be spent in the current period.

AUD--Passed
FAR--Passed
REG--Passed
BEC--Passed

[Author]

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