Private sector,not-for-profit hospital received a gift of $2,000,000 from a donor who indicated that the gift was to be "split" between the hospital and the donor's beneficiary.Specifically,this gift instrument provided that the hospital is to receive $100,000 per year for the next ten years,with the remainder going to the beneficiary.The gift is known as a charitable lead trust,from the point of view of the hospital.The gift was received in 2012,with the first payment to the hospital due in 2013.In 2012,the hospital would record revenue in the amount of:

Question

Quizplus · Accepted Answer

The hospital should record revenue in 2012 based on the present value of the future receipts, which is the amount that the donor has committed to donate. Therefore, the hospital should record revenue of the present value of $100,000 per year for the next ten years, which can be calculated based on an appropriate discount rate.

Private Sector,not-For-Profit Hospital Received a Gift of $2,000,000 from a Donor