The College of Central North (a small private not-for-profit entity) has the following events and transactions.

a. On January 1, Year 1, the board of trustees votes to restrict $1.9 million of previously unrestricted investments to construct a new football stadium at some future point in time.

b. On April 1, Year 1, Dr. Johnson, a graduate of the college, gives the school $4 million in investments that must be held forever. All subsequent cash income is to be used to help pay for construction of the football stadium. After that, the money must be used for maintenance of the stadium.

c. On December 31, Year 1, the investments in (b) generate $500,000 in cash interest revenue. In addition, the investments went up in value by $44,000.

d. On January 1, Year 2, the school builds the new football stadium with the restricted $2.4 million.

Cash is paid. The stadium has an expected life of 20 years and no anticipated residual value.

e. On January 2, Year 2, Dr. Johnson buys a seat for the current year on the 50-yard line of the stadium for cash of $30,000. The seat’s fair value for that year is $12,000.

f. On January 3, Year 2, Dr. Johnson provides free medical services to the school. These services have a fair value of $14,000. A specialized skill was needed and the school would have bought the services if not donated.

g. On January 4, Year 2, Dr. Johnson donates a small painting by Picasso to be displayed in the school library. It is appraised as having a value of $30,000. The donors had made no stipulations about the financial reporting in connection with their gifts.

For each of the following independent situations, indicate whether the statement is true or false.

Briefly explain the reason for your answer.

(1) On January 1, Year 1, net assets without donor restrictions reported by the school will be reduced.

(2) As of December 31, Year 1, net assets with donor restrictions will have increased by $500,000 during the year because of purpose restrictions stipulated by donors.

(3) On December 31, Year 1, the amount of net assets that must be permanently held according to donor specifications went up by $44,000.

(4) On January 1, Year 2, net assets without donor restrictions increased by $500,000.

(5) Based on the information provided, depreciation expense will not be recorded in connection with the football stadium in Year 2.

(6) Based on the information provided, depreciation expense will not be recorded in connection with the football stadium in Year 3.

(7) For financial reporting purposes, net assets without donor restrictions increased by $30,000 on January 2, Year 2.

(8) For financial reporting purposes, contributed revenue increased by $18,000 on January 2, Year 2.

(9) On January 3, Year 2, net assets without donor restrictions went up and down at the same time.

(10) On January 3, Year 2, net assets without donor restrictions might be reported as going up and down at the same time.

(11) On January 3, Year 2, net assets without donor restrictions will go down and might go up.

(12) On January 4, Year 2, contributed revenue of $30,000 must be reported.

(13) On January 4, Year 2, contributed revenue of $30,000 must not be reported.