A government college received a $2 million grant restricted to research on developing a process for synthesizing a stable triple helix. $500,000 of qualifying research costs were incurred during the year. The college should report:

Question

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The grant is restricted to research on developing a process for synthesizing a stable triple helix, which means that the grant revenue should be recognized as earnings only after qualifying research costs are incurred. Therefore, the college should report grant revenues of $500,000 (the amount of qualifying research costs incurred during the year) and a liability for unearned grant revenues of $1.5 million (the portion of the grant that remains unearned until the research is completed).

A Government College Received a $2 Million Grant Restricted to Research