1. Which of the following statements is correct?

1. An irrevocable charitable remainder trust is a split-interest agreement whereby the

nonprofit entity receives the assets in the trust at some future date or upon the

death of the donor or the donors beneficiary.

2. Similar to state and local government financial reporting, the focus of financial

reporting for nonprofit entities is on entity-wide resource restrictions and on

individual funds.

3. A and B.
4. Neither A nor B.

2. Margaret Smith donated $100,000 to a voluntary health and welfare organization in 2021. Ms. Smith restricted the donation to the acquisition of capital assets. In 2022, the nonprofit entity acquired $80,000 of equipment using Ms. Smiths donation. The equipment has a useful life of 8 years and no residual value. The nonprofit uses straight-line depreciation for all of its capital assets and has a policy of taking a full years depreciation in the year of acquisition. For the year ended December 31, 2021, which of the following statements is correct?

1. Net assets with donor restrictions increased $100,000.
2. Net assets without donor restrictions were not affected.
3. A and B.
4. Neither A nor B.

3. Refer to the previous question. Which of the following statements is correct for the year ended December 31, 2022?

1. Net assets with donor restrictions decreased $80,000.
2. Net assets without donor restrictions increased $70,000.
3. A and B.

Neither A nor B.