Net assets with donor restrictions are released when:

• A. As assets are spent for the purposes intended by the donor.
• B. When the donor restrictions expire.
• C. When the organization completes the project.
• D. When cash is expended.

Answer: (A)

Donor-imposed restrictions stay in place until the organization satisfies them by using the resources for the donor’s stated purposes. When expenditures are made specifically to meet those purposes, the restrictions are considered satisfied, and the amount moves from restricted net assets to the unrestricted (or less-restricted) category. This reflects that the funds are no longer tied to the donor’s conditions.

In practice, this means the release happens as the assets are spent to fund the designated activities or programs. Time restrictions can also end when the specified time passes, but the standard and most straightforward trigger is spending the funds for the purpose the donor designated. Releasing funds because cash is merely spent or because the project simply ends doesn’t automatically align with satisfying the donor’s conditions if those expenditures aren’t properly tied to the restricted purpose.