Simplex Games, a not-for-profit entity organized to provide athletic competition opportunities for high school students, utilizes a number of volunteers in carrying out its mission. At the 2017 Games 50 volunteers provided a total of 1,000 hours of service performing tasks such as picking up litter and delivering water to the athletes. A local CPA firm donates its services to prepare the annual tax return and other federal and state required paperwork which must be filed to maintain its status as a tax-exempt organization. During 2017 the CPA firm provided 50 hours of service. If purchased, the CPA services would have cost $60 per hour and the game workers would have cost $6 per hour. How much contributed service revenue should Simplex Games recognize in 2017?

Question

Quizplus · Accepted Answer

Simplex Games should recognize contributed service revenue for the CPA firm's services because they require specialized skills and would typically need to be purchased. The CPA services provided 50 hours at $60 per hour, totaling $3,000. The volunteer services do not meet the criteria for recognition as they do not require specialized skills.

Simplex Games, a Not-For-Profit Entity Organized to Provide Athletic Competition