A private,not-for-profit hospital received a contribution of $40,000 on June 15,20X8.The donor restricted the contribution to funding research activities currently being performed by the hospital.For the year ended December 31,20X8,the hospital spent $30,000 of the contribution on research activities.The hospital expended the remaining $10,000 on research activities in January of 20X9.
-Refer to the above information.On the statement of operations prepared for the year ended December 31,20X8,the events described would:

Question

Quizplus · Accepted Answer

The $40,000 contribution was restricted to funding research activities, so it cannot be included in operating income. The $30,000 spent on research in 20X8 can be recognized as an expense, but the remaining $10,000 spent in 20X9 cannot be recognized until that year. Therefore, the contribution has no effect on operating income for the year ended December 31, 20X8.

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