Moore Art Association, a not-for-profit entity, received a series of pledges in January of Year One (the beginning of its fiscal year) totaling $10 million. The organization adheres to FASB Statement No. 116 guidelines related to pledge revenue and receivable recognition. Further, Moore is a mature entity with ample historical experience related to the collectability of pledges.

Based upon this experience, Moores CFO believes that 70% of the year one pledges will be collected within the first year. She estimates that Moore will be able to collect 70% of year one the pledges by year end and that 20% of the remaining pledges will not be collectible in year two.

1- Suppose the CFO has determined that instead of being able to collect 70% of the $10 million year one pledges within the first year, these pledges are expected to be collected in equal monthly amounts over a four-year period (e.g. 48 periods);

2- Further suppose that Moore is not a mature not-for-profit (however, very popular as $10 MM is a healthy amount of donations!), and does not possess a sufficient history of pledge collectibles necessary to arrive at a reasonable estimate of an uncollectible pledge amount.

Instead - as allowed by FASB Statement No. 116 - the CFO elects to discount the pledges which will remain uncollected after the December year end of Year One (hint #1: e.g. for three additional years / 36 periods), using a discount interest rate of 8% to reflect the fairly significant risk of non - collection.

Q: Related to the pledges which are expected to be collected after year one, what amount should Moore's CFO record as Pledges Receivable and in what Fund?

$208,333 in an Unrestricted Fund

$2,441,079 in an Unrestricted Fund

$2,441,079 in a Restricted Fund

$7,500,000 in a Restricted Fund