Simulation: Endowments

On January $31,20$X$1,$ 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 $20x2,$ 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.

Identify which category of net assets $($WODR or WDR$)$ each transaction belongs in:

Transactions

Answers

The receipt of the $$2$ million gift in $20x1$

The receipt of $$50,000$ of dividend income in $$20x1$

The $$120,000$ unrealized gain in $20x1$

The $$50,000$ of dividend income, assuming the contribution was received late in $20$X$1$ and the dividend income is received in $20$X$2$

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 $20x2$