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. How much donation revenue should the not-for-profit organization recognize in the current year, if the organization uses the deferred contribution method of reporting?

Question

Quizplus · Accepted Answer

Under the deferred contribution method, the not-for-profit organization recognizes the revenue in the year in which the expenses are incurred on the project. Since $14,000 has been spent towards the project in the current year, the organization should recognize $14,000 as donation revenue in the current year. The remaining $6,000 will be recognized as revenue in the following year when the project is completed. Therefore, the correct choice is B) $14,000.

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