Net assets for which the donor has indicated use in a future period or for a par

ID: 2511619 • Letter: N

Question

Net assets for which the donor has indicated use in a future period or for a particular purpose 1. Nonexchange transactions 2. Temporarily restricted net assets 3. Collections 4 Variance power Transactions in which the donor derives no direct tangible benefits 1vT The unilateral power of an organization to redirect donated assets to a different beneficiary than initially indicated by the donor Exchange transactions Board-designated net assets Permanently restricted net assets Promise to give 5. Works of art, historical treasures or similar assets held and protected for public exhibition and, if sold, proceeds would be used to acquire similar assets 6. 7. 8. Unrestricted net assets that the governing body decides to set aside for specific purposes

Explanation / Answer

Answer

Key Term

Definition

Reason or Explanation

2. Temporarily restricted net assets

Net assets for which the donor has indicated use in a future period or for a particular purpose.

Temporarily Restricted funds are those items that have a donor-imposed restriction that will be satisfied in the future (usually in one year). Donor's restriction may be for a particular purpose.

1.Nonexchange transactions

Transactions in which the donor derives no direct tangible benefits.

In a non exchange transaction, a government gives value without directly receiving equal value in return.

4. Variance power

The unilateral power of an organization to redirect donated assets to a different beneficiary than initially indicated by the donor.

In this beneficiary organization has unilateral power to change the use of the assets. Also they have a variance power to transfer the assets to another party (or beneficiary) without approval of any other organization.

7. Permanently restricted net assets

Works of art, historical treasures or similar assets held and protected for public exhibition and, if sold, proceeds would be used to acquire similar assets.

Permanently restricted net assets are held by nonprofits organizations for which donors have imposed restrictions on usage that generally do not expire.

6.Board designated net assets

Unrestricted net assets that the governing body decides to set aside for specific purpose.

Where board of directors of an organization earmark an asset for a specified purpose. As it is not a donor-imposed restriction, the asset is classified as unrestricted net assets.