Question

previously a local charity received a $1 million gift, the income from which was restricted to support activities for senior citizens. during the current year the endowment earned $40,000 of interest revenues, of which the charity designated $30,000 to support senior citizen activities. on its year-end statement of financial position, the charity would report temporarily restricted net assets of: group of answer choices $40,000. $ 0. $30,000. $1.04 million.

Answer 1

The charity would report temporarily restricted net assets of $30,000 on its year-end statement. This represents the amount of interest revenue designated for senior citizen activities that has not yet been used.

Step-by-step explanation:

The question pertains to how a charity should report its temporarily restricted net assets on its year-end financial statement. Initially, the charity received a $1 million endowment which was restricted for senior citizen activities. This year, that endowment generated $40,000 in interest revenue. The charity allocated $30,000 of those revenues to senior activities, as per the restriction.

When reporting on the statement of financial position, the charity must consider only the portion of the endowment's income that remains designated for the restricted purpose but has not yet been used. Since $30,000 of the interest revenue is specifically set aside for senior citizen activities and has not yet been utilized, this amount represents temporarily restricted net assets.

Therefore, the charity would report temporarily restricted net assets of $30,000 on its year-end statement.