A private college receives the following pledges of support.
1. As part of its annual fund drive, alumni and friends of the college pledge $8 million. The college estimates that about 15 percent of the pledges will prove uncollectible.
2. A CPA firm promises to establish an endowed chair in the accounting department by donating $500,000.


The chair agreement will provide that the funds be used to purchase investment grade securities and that the income from the securities be used to supplement the salary of the chair holder and support his or her academic activities.
3. A private foundation promises to donate $100,000 to be used to support a major revision of the college€™s accounting curriculum.
4. An alumnus pledges $25,000 to the college€™s loan fund, which is used to make loans to students requiring financial assistance.
5. The college is seeking support for construction of a new athletic field house. A local real estate investor promises to donate ten acres of land on which a field house could be built if the college is able to raise the funds required to construct the building. The land has a market value of $1 million.
Indicate the category of net assets (unrestricted, temporarily restricted, or permanently restricted) in which each of the contributions should be recorded and the amount of revenue, if any that should be recognized when the pledge was made. Briefly explain yourresponse.

Transcribed Image Text:

Sundown State University, Fund Balance Sheel (in thousands) Current Plant Total Assets Cash and temporary investments Accounts receivable Inventories Loans to other funds Land, buildings, and equipment, net of $18,567$22,108 2,736 $29, S 10,853 81,139 48,710 1,990 15,436 45,974 1,990 8,557 6,879 283,181 $29,114 $24844 283.181 $36.490 $340,008 430456 Total assets Accounts pavable Loans from other fands Bonds payable $23,024 1,704 24,728 15,436 212.971 253,135 53649 $134.434 177321 $ 32 24.505 15,404 188,466 $205,574 23,024 $24,537 6,090 307 Total liabilities $ Net assets Fund balances Restricted Designated by the university 4,102 1,002 $20,346 $134,434 $158,882 11,002 7437 134,434$177,321 10,000 6,144 $36490) S 307 $ 6,090307 Total fund balance