A private college received an offer from a CPA who is an alumnus to teach a one-semester advanced accounting course at no cost.FASB 116 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

FASB 116 requires that contributions of services be recognized as revenue if they create or enhance non-financial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. The CPA's teaching service meets these criteria.

A Private College Received an Offer from a CPA Who