A private,not-for-profit hospital received a contribution of $40,000 on June 15,2008.The donor restricted the contribution to funding research activities currently being performed by the hospital.For the year ended December 31,2008,the hospital spent $30,000 of the contribution on research activities.The hospital expended the remaining $10,000 on research activities in January of 2009.
-Refer to the above information.On the statement of cash flows prepared for the year ended December 31,2008,the events described would increase net cash flows provided by

Question

Quizplus · Accepted Answer

The receipt of the contribution is a non-operating activity and would not affect net cash flows from operating activities. The contribution was restricted to funding research activities, which is a component of operating activities. Therefore, the $30,000 spent on research activities in 2008 would decrease net cash flows from operating activities. However, the remaining $10,000 spent on research activities in January of 2009 would be included in the calculation of net cash flows from operating activities for that year. Thus, the events described would increase net cash flows provided by operating activities by $10,000 only.

A Private,not-For-Profit Hospital Received a Contribution of $40,000 on June