For the 20X6 fiscal year, KU Care, a not-for-profit organization, received $300,000 in unrestricted donations and $175,000 in donations designated specifically for cancer research. $200,000 of the unrestricted donations and $100,000 of the restricted donations were expended in 20X6 for current operations and cancer research, respectively. KU did not set up a separate fund for the restricted donation. Under the deferral method, how much of the donations should be reported as revenue in the statement of operations for the 20X6 fiscal year?

Question

Quizplus · Accepted Answer

Under the deferral method, unrestricted donations are recognized as revenue in the period they are received, while restricted donations are recognized as revenue when the restriction is fulfilled.

Therefore, $200,000 of the unrestricted donations should be recognized as revenue in 20X6, along with $100,000 of the restricted donations that were expended for cancer research in 20X6. The remaining $75,000 of the restricted donations should be deferred to future periods until the restriction is fulfilled.

Thus, the total revenue to be reported in the statement of operations for the 20X6 fiscal year is $200,000 + $100,000 = $300,000 for current operations and cancer research, plus the amount deferred from the restricted donation ($75,000), for a total of $400,000.

Therefore, the best choice is C.

For the 20X6 Fiscal Year, KU Care, a Not-For-Profit Organization