NP-Investments Flashcards
How should a nongovernmental not-for-profit entity classify gains and losses on investments purchased with permanently restricted assets?
Investment gains and losses are reported as unrestricted revenues in the statement of activities unless the donor of the principal investment amount has explicitly instructed otherwise.
The statement of activities is focused on clarifying whether revenues are unrestricted, temporarily restricted, or permanently restricted so gains may or may not be netted for presentation, and gains may or may not be reported net of expenses.
During the year, Smith University’s board of trustees established a $100,000 fund to be retained and invested for scholarship grants. The fund earned $6,000 which had not been disbursed at December 31. What amount should Smith report in a quasi-endowment fund’s net assets at December 31?
Since the principal of the endowment and the income from investment of endowment funds are both restricted to the purpose of funding scholarships, and the investment income remained undisbursed at the end of the fiscal year, the principal and income both contribute to the net assets of this specific fund.
106K
Maple Church has cash available for investments in various restriction categories. Maple’s policy is to maximize its financial resources. How may Maple pool its investments?
A.
Maple may not pool its investments.
B.
Maple may pool all investments, but must allocate realized and unrealized gains and losses considering donor restrictions, board policy, and relevant legislation.
C.
Maple may pool only unrestricted investments, but must allocate realized and unrealized gains and losses considering donor restrictions, board policy, and relevant legislation.
D.
Maple may pool only restricted investments, but must allocate realized and unrealized gains and losses considering donor restrictions, board policy, and relevant legislation.
Maple may pool all investments, but must allocate realized and unrealized gains and losses considering donor restrictions, board policy, and relevant legislation.
