B is corrent. According to the AICPA Audit and Accounting Guide, Health Care Organizations, expirations of donor restrictions on temporarily restricted net assets should be reported on the statement of operations as net assets released from restrictions. On Scarbrough’s statement of operations for year 2 , the use of the $75,000 contribution for research in year 2 should be reported as “net assets released from restrictions.” This amount should be included in revenues, gains, and other support on the statement of operations, and it is also included in the “performance indicator” reported on the statement of operations. The use of the $225,000 contribution to acquire a capital asset placed into service during year 2 is also reported as “net assets released from restrictions” on the year 2 statement of operations. However, this amount is reported after the performance indicator on the statement of operations. Accordingly, the total amount reported as net assets released from restrictions on the year 2 statement of operations is $300,000.
A is incorrect because expirations of donor restrictions on temporarily restricted net assets should be reported on the statement of operations as net assets released from restrictions.
C is incorrect because expirations of donor restrictions on temporarily restricted net assets should be reported on the statement of operations as net assets released from restrictions.
D is incorrect because expirations of donor restrictions on temporarily restricted net assets should be reported on the statement of operations as net assets released from restrictions.
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