A local town received a donation of $300,000. The donor stipulated that the money be invested. The investment earnings are to be used to provide funding for the town's recreation programs but the principal is to remain intact. The town should record the $300,000 as

Question

Quizplus · Accepted Answer

The $300,000 should be recorded as a revenue in a Permanent Fund because the principal is to remain intact, and only the earnings from the investment are to be used for funding. Permanent Funds are used to account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs.

A Local Town Received a Donation of $300,000