Conditional pledges should not be recognized as revenue until the conditions have been met.

Question

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Conditional pledges are promises made by donors to provide funding only if certain conditions are met. These conditions may include the completion of a project, the achievement of specific goals, or the occurrence of certain events. Because the donation is contingent on these conditions being met, it is not considered revenue until the conditions have been satisfied. Only then can the funds be recognized as revenue on the financial statements. Therefore, it is important to exercise caution when recording conditional pledges and to ensure that they are only recognized as revenue when the conditions have been met.

Conditional Pledges Should Not Be Recognized as Revenue Until the Conditions