Which of the following best describes the accounting for restricted net assets?

Question

Which of the following best describes the accounting for restricted net assets?

A. Investments are initially recorded at market value when received as donations, and any income earned on those investments is reported as temporarily restricted.

B. Investments are initially recorded at market value when received as donations, and any income earned on those investments is reported as permanently restricted.

C. Investments are initially recorded at market value when received as donations, and any income earned on those investments is reported in the net asset category to which the investment relates (i.e., permanently restricted, temporarily restricted, or unrestricted).

D. Investments are initially recorded at market value when received as donations, and any income earned on those investments is reported as unrestricted.

Explanation / Answer

In case of when net assets are restricted , Investments are initially recorded at market value when received as donations, and any income earned on those investments is reported in the net asset category to which the investment relates (i.e., permanently restricted, temporarily restricted, or unrestricted).

Hence Correct answer is : C.

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