Looking for a 400 word summary of how to account for permanent endowments?
Colette Kamps, CPA, has a great overview in her post Underwater with UPMIFA, at the Nonprofit GPS blog.
Highlight of the summary:
So at the end of the third year, the endowment balance is at $485,000. Permanently restricted net assets would still remain at $500,000 (this amount doesn’t change). The underwater portion of $15,000 would “sit” as a debit in unrestricted net assets until it is subsequently recovered with market gains.
Check it out if you want to ‘get’ UPMIFA in just two minutes.