Under FAS 116, contributions that create term endowments are classified as increasing permanently restricted net assets.

Question

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Under FAS 116 (now part of ASC 958 due to the FASB Accounting Standards Codification), contributions that create term endowments are classified as temporarily restricted net assets, not permanently restricted, because they are subject to donor-imposed restrictions that they be held for a specified period of time before they can be used.

Under FAS 116, Contributions That Create Term Endowments Are Classified