A Voluntary Health and Welfare Organization Received a $300,000 Contribution

question 28

Multiple Choice

A voluntary health and welfare organization received a $300,000 contribution on April 15,20X9,from a donor who stipulated the donation be invested permanently in stocks and bonds.The donor further stipulated earnings from the investments be spent according to the wishes of the governing board of the voluntary health and welfare organization.Earnings from the investments for the year ended June 30,20X9,amounted to $6,000.How would the voluntary health and welfare organization report this information for the year ended June 30,20X9?

• A) Increase in permanently restricted net assets of $306,000.
• B) Increase in permanently restricted net assets of $300,000, and in temporarily restricted net assets of $6,000.
• C) Increase in permanently restricted net assets of $300,000, and in unrestricted net assets of $6,000.
• D) Increase in permanently restricted net assets of $300,000, and in board-designated net assets of $6,000.

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Definitions:

Disutility

The dissatisfaction or unhappiness experienced by a consumer due to the consumption of a good or service, or from engaging in an activity.

Fine

A monetary penalty imposed by an authority on individuals or organizations for violations of legal rules.

Endowment Effect

The phenomenon where individuals value an owned item more than a similar item they do not own.

Gains

An increase in wealth, utility, or value resulting from an economic transaction or activity.