_____ on 5/5/05, a Donor Contributed an Equity Security Having a $500,000

Multiple Choice

_____ On 5/5/05, a donor contributed an equity security having a $500,000 fair value. The donor stipulated that (a) the NPO may sell the equity security at any time and make other suitable investments, (b) the $500,000 endowment must remain intact in perpetuity, and (c) the income and gains may be spent only on diabetes research (no mention is made regarding the treatment of losses) . The equity security had a fair value of $530,000 at 12/31/05 and $480,000 at 12/31/06. (No dividends were received in either year.) In early 2006, a portion of the equity security was sold for $30,000 cash. The NPO spent $22,000 cash on diabetes research in 2006. What is the change in the various categories of net assets for 2006 as a result of the decline in the equity security's market value in 2006?

A) Decrease UR net assets by $50,000.
B) Decrease TR net assets by $50,000.
C) Decrease TR net assets by $8,000 and UR net assets by $12,000.
D) Decrease TR net assets by $30,000 and UR net assets by $20,000.
E) Decrease PR net assets by $30,000 and UR net assets by $20,000.