Hargett Heart Association has received donated services from several members of the community.The controller must determine which should be recorded as contribution revenue.The services and their values follow: 1) A retired biology professor conducted two small research projects, which resulted in the organization receiving a major grant, but did not accept a stipend for either.The stipend is usually $2,000 per project.
2) Local high school students participated in "Clean Up the Neighborhood" Day and provided 100 hours of labor trimming hedges and raking leaves on the property.The controller estimates the going rate for such work is $8 per hour.
3) An architect donated plans for a renovation to one of the research labs.The association paid $5,000 for plans for a similar renovation two years ago.

How much contribution revenue should be recognized from donated services?

Question

Hargett Heart Association has received donated services from several members of the community.The controller must determine which should be recorded as contribution revenue.The services and their values follow: 1) A retired biology professor conducted two small research projects, which resulted in the organization receiving a major grant, but did not accept a stipend for either.The stipend is usually $2,000 per project.
2) Local high school students participated in "Clean Up the Neighborhood" Day and provided 100 hours of labor trimming hedges and raking leaves on the property.The controller estimates the going rate for such work is $8 per hour.
3) An architect donated plans for a renovation to one of the research labs.The association paid $5,000 for plans for a similar renovation two years ago.
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How much contribution revenue should be recognized from donated services?

Quizplus · Accepted Answer

- The retired biology professor's services resulted in receiving a major grant, which is a direct benefit to the organization. Therefore, the value of the stipend not accepted should be recorded as contribution revenue. The total value is $4,000 (2 x $2,000).
- The local high school students' services can also be recorded as contribution revenue. The value is 100 hours x $8 per hour, which is $800.
- The architect's donated plans are not directly related to a benefit received by the organization, as they had similar plans in the past and paid for them. Therefore, this service should not be recorded as contribution revenue.

Adding up the contribution revenue from the two services that qualify yields $4,000 + $800 = $4,800. However, the question asks for the amount to be recognized, which means it is possible that some of these gifts were already recorded in the past. Therefore, the best choice is B, as it is equal to the amount expected, without providing any extra information that would change the answer.

Hargett Heart Association Has Received Donated Services from Several Members