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On December 30 of the current year, Leigh Museum, a nongovernmental not-for-profit entity (NFP), received a $7 million donation of Day Co. shares with donor-stipulated requirements as follows: Shares valued at $5 million are to be sold, with the proceeds used to erect a public viewing building. Shares valued at $2 million are to be retained, with the dividends used to support current operations. As a consequence of the receipt of the Day shares, how much should Leigh report as net assets with donor restrictions on its statement of financial position for the current year?

Respuesta :

jepessoa

Answer:

$7,000,000

Explanation:

Donor imposed restrictions can be temporary or perpetual; the $5 million in shares are restricted and should only be used for a building and the rest ($2 million) must be kept and their dividends should be used for current operations.

The whole $7 million have restricted uses, therefore they should all be reported as assets with donor restrictions.

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