A private college received an offer from a CPA who is an alumnus to teach a one-semester advanced accounting course at no cost.ASC 958 prescribes that this contribution of service:
A)need only be disclosed in the footnotes to the financial statements.
B)be recorded as an asset with an equivalent amount recorded in the unrestricted fund balance.
C)be recorded as a revenue with an equivalent amount recorded as an expenditure.
D)need not be recorded if the service is for a period less than one academic year.

Question

Quizplus · Accepted Answer

ASC 958 requires that contributed services be recognized as revenue and an expense (or asset, if the service creates or enhances a nonfinancial asset) if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Teaching an advanced accounting course requires specialized skills and would typically be a service the college would have to purchase if not donated, thus it should be recorded as revenue with an equivalent amount recorded as an expense.

A Private College Received an Offer from a CPA Who