A governmental entity is the recipient of a bequest of a multi-story office building that the government intends to use as a new city hall.The building has a historical cost of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000.The city should recognize on its governmental fund financial statements, donations revenue of
A) $-0-.
B) $700,000.
C) $850,000.
D) $1,050,000.

Question

Quizplus · Accepted Answer

The city should recognize donations revenue of the fair value of the building, which is $1,050,000. This is because the fair value of the donated asset is more reliably measurable than its historical cost or book value in the hands of the benefactor. Therefore, the best choice is D.

A Governmental Entity Is the Recipient of a Bequest of a Multi-Story