Question

The following transaction pertains to the activities of the Kale Gallery, a nonprofit entity. Choose which classification of net assets is affected: net assets with donor restrictions (NAWDR) or net asset without donor restrictions (NAWODR). Jane Smith donates $20,000, to be placed in a fund that will be maintained in perpetuity.

Answer 1

Jane Smith donates $20,000, to be placed in a fund that will be maintained in perpetuity.

This will affect net assets with donor restrictions (NAWDR)

Here the donation is supposed maintain in a fund in perpetuity. That means it is for specific reason. Cannot use it simply. There for it will affect NAWDR.

Permanently restricted and temporarily restricted net assets are combined into “net assets with donor restrictions.” This category includes amounts restricted by the donor in perpetuity, restricted for specified purposes, restricted by the passage of time and for amounts of underwater endowments.