On January $31,201,$ a nongovernmental not$-$for$-$profit entity $($NFP$)$ received a $$2$ million gift. The donor specified that the gift be invested in perpetuity. The donor did not restrict the investment return. But the Uniform Prudent Management of Institutional Funds Act $($UPMIFA$)$ applies to this perpetual endowment. For the year ending December $31,20$x$1,$ the investments purchased with the gift earned $$50,000$ of dividend income. The fair value of the investments increased by $$120,000.$

Early in $20$X$2,$ the directors decided to lobby for educational reforms. Lobbying fees were $$90,000.$ The directors appropriated the $$50,000$ of dividend income to cover part of the total fees. They used $$40,000$ of other unrestricted resources to pay the remainder of the fees.

The NFP$\text{'}$s policy is to report donor$-$restricted investment income as an increase in net assets without donor restrictions if the restriction expires in the same period the income is recognized. The NFP meets the requirements to apply this policy.

Select from the option list provided the appropriate classification of net assets in which each transaction should be reported in the statement of activities. Each choice may be used once, more than once, or not at all.

Transactions

The receipt of the $$2$ million gift in $201$

The receipt of $$50,000$ of dividend income in $20$X$1$

The $$120,000$

unrealized gain in $20$X$1$

The $$50,000$ of dividend income, assuming the contribution was received late in $20$X$1$ and the dividend income is received in $202$

The $$120,000$ unrealized gain, assuming the contribution was received late in $20$X$1$ and the full amount of the unrealized gain is recognized in $202$

Answers

Net assets with donor restrictions

Net assets with donor restrictions

Net assets with donor restrictions

Net assets with donor restrictions

Net assets with donor restrictions