ANSWERS ON PROBLEM 16-3 PAGES 440-446

PROBLEM 16-3: MULTIPLE CHOICE

1. B = 4M fair value of donated land. The 240K dividends are treated as dividend income rather
than contributions revenue.

2. A = 8M cash donation for acquisition of truck

3. D = 2M investment in equity securities

4. C = 8M cash donation for acquisition of truck

5. B = (4M land + 8M truck + 240K cash dividends) = 12,240,000

6. D = 8M cash – 8M net asset released from restriction = 0

7. A = 2M investment in equity securities

8. A (see table below)
9. D (see table below)
10. A
Solutions:
Temporarily Permanently
  Unrestricted restricted restricted
Shares 8,000,000
Plant assets 4,000,000
Equipment held for sale 20,000,000
Board-designated funds 2,400,000
Cash with time restriction 80,000
Cash invested indefinitely 3,200,000
Investment income for scholarships 200,000
Totals 6,400,000 20,280,000 11,200,000

11. A = 40M fair value of land

12. C

13. D = 80K restricted support + (480K – 300K) excess of sale price over fair value = 260,000

14. B = 400K + 1M = 1.4M restricted support

15. C

16. D (480,000 released from restriction – 480,000 cash expended + 200,000 released from
restriction – 200,000 cash expended) = 0

17. A (800,000 grant – 480,000 released from restriction – 200,000 released from restriction) =
120,000 net increase

18. D
19. D

20. B – Revenues from restricted contributions are presented separately at the bottom part of the
statement of operations, after unrestricted revenues and expenses.