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18 January, 04:17

On January 1, Read, a nongovernmental not-for-profit entity, received $20,000 and an unconditional promise of $20,000 for each of the next four calendar years to be paid on the first day of each year. The present value of an ordinary annuity for four years at a constant interest rate of 8% is 3.312. What amount of net assets with donor restrictions is reported in the year the promise was received?

a. $100,000b. $66,240c. $86,240d. $80,000

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  1. 18 January, 04:38
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    amount of net assets with donor restrictions is $66240

    correct option is B $66,240

    Explanation:

    given data

    received = $20000

    paid = $20000

    interest rate = 8%

    interest = 3.312

    to find out

    What amount of net assets with donor restrictions is reported

    solution

    we know here contributions received are accounted for at fair value

    and fair value is $20000

    so present value of the payments = $20000 * 3.312

    present value of the payments = $66240

    and here Unconditional promises for give cash amounts in the future

    ans reported as donor-restricted support,

    unless donor clearly intended support to current activities

    so amount of net assets with donor restrictions is $66240

    and amount $20000 receive on 1st January

    increases net assets without donor restrictions
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