Military Family Center is a voluntary welfare organization funded by contributions from the general public. During 2016 unrestricted pledges of $800,000 were received, half of which were payable in 2016 with the other half payable in 2017 for use in 2017. It was estimated that 10% of these pledges would be uncollectible. How much should National report as net contribution revenue for 2016 with respect to the pledges?

Question

Quizplus · Accepted Answer

The net contribution revenue for 2016 should be $720,000. This is calculated by taking the total unrestricted pledges of $800,000 and subtracting the estimated uncollectible amount of 10%, which is $80,000 ($800,000 * 10%). This results in a net amount of $720,000. The timing of the payments (half in 2016 and half in 2017) does not affect the revenue recognition for pledges that are unconditional promises to give, as they are recognized when the promise is made.

Military Family Center Is a Voluntary Welfare Organization Funded by Contributions