A Private, Not-For-Profit Hospital Received a Contribution of $40,000 on June

question 111

Multiple Choice

A private, not-for-profit hospital received a contribution of $40,000 on June 15, 20X8. The donor restricted the contribution to funding research activities currently being performed by the hospital. For the year ended December 31, 20X8, the hospital spent $30,000 of the contribution on research activities. The hospital expended the remaining $10,000 on research activities in January of 20X9.
-Refer to the above information.On the statement of operations prepared for the year ended December 31,20X8,the events described would:

• A) increase operating income by $30,000.
• B) have no effect on operating income.
• C) increase unrestricted net assets by $30,000.
• D) decrease unrestricted net assets by $30,000.

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Definitions:

Fully Depreciated

Describes an asset that has reached the end of its useful life, with its cost fully expensed against income over its defined accounting period.

Equipment

Tools, machinery, and other durable assets used by a business in its operations to produce goods or services.

Depreciation Method

An accounting technique used to allocate the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Depreciable Assets

Tangible or intangible assets subject to depreciation, which involves allocating the cost of the asset over its useful life.