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Clay University, a not-for-profit university, earned $300,000 from bookstore revenue and spent $100,000 for faculty research in 20X1. The $100,000 for faculty research came from a $150,000 research grant received in the previous year. What is the effect of these events on net assets without a donor restriction in 20X1

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Answer:

Net assets without a donor restriction in 20X1 will increase in $300,000

Explanation:

Given:

  • Bookstore revenue:  $300,000
  • Spent for faculty research: $100,000
  • The $100,000 for faculty research came from a $150,000 research grant received in the previous year

As we can see, $ 300,000 of bookstore sales have increased net assets that is not restricted by donors at $ 300,000. Spending $ 100,000 from a net asset to the limitations of the donor. Cost $ 100,000 (reduced) and $ 100,000 of "released" from restrictions of donors (increase) will appear in net assets without the limitations of donors.

So net assets without a donor restriction in 20X1 will increase in $300,000

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