Board-designated restriction

A board-designated restriction is a restriction on the use of an asset that is imposed by the board of directors. If this is a for-profit entity, the restriction is monetary; the amount of the restriction is shifted from the retained earnings account to a separate equity account that identifies the asset. If this is a non-profit entity, then the restriction applies to a specific asset; if so, the asset is still classified as an unrestricted net asset, since only a donor can impose a real restriction on an asset.