If a government receives a donation of a work of art, the government must recognize revenue in its government-wide financial statements

Question

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Government-wide financial statements are prepared using the accrual basis of accounting. Under the accrual basis of accounting, revenue is recognized when earned and expenses are recognized when incurred, regardless of when cash is received or paid. Therefore, the government must recognize revenue in its government-wide financial statements when it receives a donation of a work of art, regardless of whether it elects to capitalize its collection.

If a Government Receives a Donation of a Work of Art