Clara Hospital, a private not-for-profit hospital, earned
$250,000 of gift shop revenues and spent $50,000 on research
during the year ended December 31, 2012. The $50,000 spent
on research was part of a $75,000 contribution received during
December of 2011 from a donor who stipulated that the donation
be used for medical research. Assume none of the gift shop
revenues were spent in 2012. For the year ended December 31,
2012, what was the increase in unrestricted net assets from the
events occurring during 2012?

(c) Unrestricted net assets increased $250,000 for the
year ended December 31, 2012. The $50,000 spent on research
during 2012 would be reclassified (added) to unrestricted net
assets when the money was spent for research. The $50,000
addition to unrestricted revenues, gains, and other support would
be accompanied by a $50,000 reclassification (deduction) from
temporarily restricted revenues. The expenses of $50,000 for
research are deducted from unrestricted revenues, etc., which
include the $50,000 reclassification. Therefore, the net effect on
unrestricted net assets of spending $50,000 on research is zero.
The $250,000 of gift shop revenue is unrestricted revenue because
the governing board has control of this revenue.