The Save the Animals Foundation Received a Gift of $500,000

question 52

Multiple Choice

The Save the Animals Foundation received a gift of $500,000 from a donor who wanted the gift used to acquire habitat for endangered snails. The money may be invested but all earnings are restricted to habitat acquisition. During the year the entire gift was invested in corporate securities. At year-end, the securities had a value of $501,000. The appropriate way to recognize the change in fair value is

• A) Debit Investments $1,000; Credit Unrestricted revenue $1,000.
• B) Debit Investments $1,000; Credit Restricted revenue $1,000.
• C) Debit Investments $1,000; Credit Gain Loss adjustent $1,000.
• D) No entry should be made until the securities are sold.

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Definitions:

Shoplifting

A criminal act of stealing goods from a retail establishment without paying for them.

Sarbanes-Oxley Act

A federal law enacted in 2002 to protect investors from fraudulent accounting activities by corporations.

Accounting Oversight Board

A regulatory organization that oversees the audits of public companies to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

Civil and Criminal Penalties

Legal sanctions that can be imposed for violations of law, with civil penalties typically involving fines or damages and criminal penalties involving imprisonment or probation.