A CPA volunteers to audit the books of a local charity. The work would typically cost $5,000. The charity also had volunteers serve meals, valued at $2,000. What amount of contribution revenue should be recognized?

Answer options:

$7,000

$5,000

$2,000

How to approach this question

SOME criteria: Specialized skills, Otherwise needed, Measured Easily. Or creates non-financial asset. CPA = Yes. Serving meals = No.

Full Answer

C.$5,000✓ Correct

The audit services require specialized skills, were provided by a CPA, and would typically need to be purchased. Thus, $5,000 is recognized. General volunteer work (serving meals) is not recognized.

Common mistakes

Recognizing all volunteer hours.

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