A city was awarded a $600,000 federal grant to help finance a bridge construction project that is expected to take two years to complete. The grant will be paid in two installments: (1) 60% at the beginning of the project in Year 1, and (2) 40% when the project is completed. Capital Projects Fund revenue should be recognized in Year 1 in the amount of

Question

Quizplus · Accepted Answer

The city will receive 60% of the grant at the beginning of the project, which is $600,000 x 60% = $360,000. Therefore, the revenue recognized in Year 1 should be $360,000. The remaining 40% of the grant will be recognized when the project is completed in Year 2.

A City Was Awarded a $600,000 Federal Grant to Help