A government received a grant from another government. The $8,000,000 grant is restricted to use for construction of a facility for one of the grantee government's enterprise activities. The grant is for half the cost of the facility. The grantor will reimburse half of the costs as they are incurred. At the end of the first fiscal year, $3,000,000 has been spent on the project. $1,500,000 has been collected from the grantor. How should the grantee's Enterprise Fund statement of cash flows report the cash inflows?

Question

Quizplus · Accepted Answer

The cash inflows related to the grant should be reported in the Enterprise Fund statement of cash flows as capital and related financing activities since it is a source of capital revenue provided for the construction of the facility.

A Government Received a Grant from Another Government