A local CPA volunteered his time to prepare the Form 990 for an after-school development organization that serves disadvantaged children. If the services had not been donated the organization would have had to hire a CPA to prepare the return. In accordance with the FASB Codification, the value of the CPA's time devoted to helping the organization should be recorded as:

Question

Quizplus · Accepted Answer

The value of the CPA's time should be recorded as Support Expense because it represents an expense that was necessary for the organization to achieve its mission. This expense is not related to any specific program or project and is therefore classified as a support expense. Even though the CPA's time was donated, it still represents an expense that the organization would have had to incur if the services had not been donated. Choice A (Contribution-With Donor Restrictions) does not apply because there are no donor restrictions on the CPA's donation of time. Choice C (Machinery & Equipment) does not apply because the CPA's time is a service, not tangible equipment. Choice D (It would not be recorded) is incorrect because the value of the CPA's time is an actual expense that the organization incurred, and should therefore be recorded as such.

A Local CPA Volunteered His Time to Prepare the Form