In Not-for-Profit Organisation, Donations received for specific purpose are shown on:

Liabilities side of Balance Sheet

The correct answer is Option (1) - Liabilities side of Balance Sheet

If donation received is to be utilised to achieve specified purpose, it is called Specific Donation. The specific purpose can be an extension of the existing building, construction of new computer laboratory, creation of a book bank, etc. Such donation is to be capitalised and shown on the liabilities side of the Balance Sheet irrespective of the fact whether the amount is big or small. The intention is to utilise the amount for the specified purpose only.