ExpertHard1 markMultiple Choice
CPA · Question 09 · Area III: Select Transactions
Riverside NFP received the following contributions during Year 1:<br/>- $100,000 cash contribution with no donor restrictions<br/>- $75,000 cash contribution restricted for program services in Year 2<br/>- $50,000 pledge receivable (unconditional promise) restricted for capital improvements, due in Year 3<br/>- Volunteer services valued at $25,000 for specialized accounting work that would otherwise be purchased<br/><br/>What total amount should Riverside NFP recognize as contribution revenue in Year 1?
Riverside NFP received the following contributions during Year 1:<br/>- $100,000 cash contribution with no donor restrictions<br/>- $75,000 cash contribution restricted for program services in Year 2<br/>- $50,000 pledge receivable (unconditional promise) restricted for capital improvements, due in Year 3<br/>- Volunteer services valued at $25,000 for specialized accounting work that would otherwise be purchased<br/><br/>What total amount should Riverside NFP recognize as contribution revenue in Year 1?
Answer options:
A.
$175,000
B.
$225,000
C.
$250,000
D.
$275,000
How to approach this question
Identify each contribution type: unrestricted and restricted cash are recognized immediately, unconditional pledges are recognized when promised regardless of payment timing, and volunteer services are recognized if they require specialized skills that would otherwise be purchased.
Full Answer
C.$250,000✓ Correct
$250,000
Under ASC 958-605, NFPs recognize contributions when received or unconditionally promised. Donor restrictions affect classification (with/without restrictions) but not timing of recognition. Volunteer services are recognized if they create/enhance nonfinancial assets or require specialized skills that would otherwise be purchased.
Common mistakes
Deferring restricted contributions until restrictions are met, not recognizing pledges until cash is received, or omitting volunteer services that meet recognition criteria
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