A not-for-profit private college in Virginia created a separate foundation responsible for obtaining financial support from alumni and others.Foundation assets are used for the benefit of the college.Donations made to the foundation and subsequently transferred to the college should be:
A)recognized as revenues by the foundation when received,and as revenues of the college when transferred.
B)recognized as revenues by the foundation when received and as expenses by the foundation when transferred.
C)recognized both as a change in its interest in the foundation and as revenues by the college when the donation is received by the foundation.
D)recognized as an increase in net assets of the foundation and as revenues of the college when the donation is received by the college.

Question

Quizplus · Accepted Answer

The foundation recognizes the donations as revenues when received. When the foundation transfers the donations to the college, it recognizes the transfer as an expense, reflecting the outflow of resources for the benefit of the college.

A Not-For-Profit Private College in Virginia Created a Separate Foundation