St. Mary's Extended Care Center, a not-for-profit entity, enjoys the services of a group of high-school-age people who each agree to work three afternoons a week for three hours each afternoon performing a variety of patient-related services, such as writing letters for those who are unable to do so, delivering mail to the patient rooms, and pushing wheel-chair patients across the grounds. The services rendered by these young people enhance the quality of life for the residents. They could not be provided if they were not donated because there are not enough resources to do so. The past year the young people donated 5,000 hours in total. The services would have cost $6.00 per hour if they had been purchased but they were worth $10 an hour to St. Mary's. What is the amount of contributed revenue that should be recognized by St. Mary's related to these services?

Question

Quizplus · Accepted Answer

Under accounting standards for not-for-profit entities, contributed services are recognized as revenue only if they create or enhance non-financial assets or require specialized skills. The services provided by the high-school-age volunteers do not meet these criteria, so no contributed revenue is recognized.

St Mary's Extended Care Center, a Not-For-Profit Entity, Enjoys the Services