A city is the recipient of a cash bequest of $500,000 that must be used to plant flowers and shrubs in the city parks. During the year only $200,000 is actually received from the bequest and $150,000 is spent on shrubs. The amount that should be recognized as revenue by the city in its government-wide financial statements in the current year is

Question

Quizplus · Accepted Answer

In government-wide financial statements, revenue is recognized when it is both measurable and available. Since the city has received $200,000 of the bequest, this amount is recognized as revenue because it meets the criteria of being measurable and available. The full bequest amount ($500,000) is not recognized because it has not all been received, and the amount spent ($150,000) does not affect revenue recognition, only expense recognition.

A City Is the Recipient of a Cash Bequest of $500,000