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A private foundation made a multi-year pledge to a private college on December 31, 2013, the last day of the fiscal year. The pledge was to pay $12,000 per year each year for five years, beginning on December 31, 2014. The discount rate is 6%. The present value of five payments of $12,000 is $50,548. The present value of four payments of $12,000 is $41,581. No purpose or plant restrictions were involved.
-As of December 31,2013,the contribution revenue would be classified as:

Question

Quizplus · Accepted Answer

Since the multi-year pledge is set to start in the following fiscal year, the contribution revenue would be classified as temporarily restricted at the end of the current fiscal year (December 31, 2013). This is because the earning of the contribution revenue is subject to the passage of time (time restriction).

The Following Information Applies to the Next Three Questions