_____ 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) . (No dividends were received in any 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. The equity security had a fair value of $530,000 at 12/31/05, $480,000 at 12/31/06, and $555,000 at 12/31/07. What is the change in the various categories of net assets for 2007 as a result of the increase in the equity security's market value in 2007?

A) Increase UR net assets by $20,000 and TR net assets by $55,000.
B) Increase TR net assets by $75,000.
C) Increase PR net assets by $12,000 and TR net assets by $63,000.
D) Increase PR net assets by $20,000 and TR net assets by $55,000.
E) Increase UR net assets by $12,000 and TR net assets by $63,000.