During 2005, an alumnus of Smith College, a private not-for-profit college, transferred $100,000 to the college with the stipulation that it be spent for library acquisitions. However, the alumnus specified that none of the cash transferred could be spent until the college had matched the entire amount transferred with donations from other alumni by December 31, 2006. As of December 31, 2005, the college had received matching cash donations of only $5,000 from other alumni, and the college estimated that it was reasonably possible that it would not reach the goal of $100,000 by December 31, 2006. If the funds are not matched by December 31, 2006, the cash will be returned to the alumnus. On the college’s statement of financial position at December 31, 2005, the cash transfer of $100,000 would be included in the amount reported for

  1. Liabilities.
  2. Unrestricted net assets.
  3. Temporarily restricted net assets.
  4. Permanently restricted net assets.