The College of Central North a private school has the

The College of Central North (a private school) has the following events and transactions:(a) On
January 1, Year 1, the board of trustees voted to restrict $1.9 million of previously unrestricted
investments to construct a new football stadium at some future time.(b) On April 1, Year 1, Dr.
Johnson gives the school $4 million in investments that is to be held for-ever, but all subsequent
cash income is to be used to help pay for construction (and, later, main-tenance) of the football
stadium.(c) On December 31, Year 1, the investments in (b) generates $500,000 in cash
interest revenue. In addition, the investments went up in value by $44,000.(d) On January 1,
Year 2, the school builds a football stadium with the restricted $2.4 million in funds. Cash is
paid. The stadium has a 20-year life and no salvage value.(e) On January 2, Year 2, Dr.
Johnson buys a lifetime seat on the 50-yard line of the stadium for$30,000 in cash when this
seat’s fair value is actually $12,000.(f) On January 3, Year 2, Dr. Johnson provides free
medical services to the school. These services have a $14,000 value and require a specialized
skill that the school needed and would have bought otherwise.(g) On January 4, Year 2, Dr.
Johnson donated a painting to be displayed in the school library. It is appraised at a value of
$30,000.Unless otherwise noted, assume that the school does not have a policy that assumes a
time restriction on assets bought with restricted funds.For each of the following independent
situations, indicate whether the statement is true or false and briefly state the reason for your
answer.(1) On January 1, Year 1, unrestricted net assets reported by the school will be
reduced.(2) As of December 31, Year 1, temporarily restricted net assets will have increased by
$500,000 during the year.(3) On December 31, Year 1, permanently restricted net assets went
up by $44,000.(4) On January 1, Year 2, unrestricted net assets increased $500,000.(5) Unless
a time restriction is placed on the use of the football stadium, depreciation expense will not be
recorded in Year 2.(6) If a time restriction is placed on the use of the football stadium,
depreciation expense will not be recorded in Year 2.(7) For reporting purposes, unrestricted net
assets increased by $30,000 on January 2, Year 2.(8) For reporting purposes, contribution
revenues increased by $18,000 on January 2, Year 2.(9) On January 3, Year 2, unrestricted net
assets were reported as going both up and down.(10) On January 3, Year 2, unrestricted net
assets might be reported as going both up and down.(11) On January 3, Year 2, unrestricted
net assets will go down and might go up.(12) On January 4, Year 2, contribution revenue of
$30,000 must be reported.(13) On January 4, Year 2, contribution revenue of $30,000 must not
be reportedView Solution: The College of Central North a private school has the
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