A not-for-profit organization receives a restricted contribution of $20,000 to be used for a specific project. During the current year, $14,000 is spent toward the project with the balance to be spent next year. What should be the balance in the deferred contribution account at the end of the year, if the organization uses the deferred contribution method of reporting?

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The deferred contribution method requires the full amount of the restricted contribution to be recognized as revenue in the year received, but the amount that has not been spent on the specific project needs to be separately reported as a liability. Therefore, the balance in the deferred contribution account at the end of the year should be $6,000 ($20,000 - $14,000).

A Not-For-Profit Organization Receives a Restricted Contribution of $20,000 to Be