A governmental hospital receives notice of a $100,000 grant from the federal government to conduct breast cancer research.The grant contains an eligibility requirement;that is,the hospital must incur costs and submit quarterly reports of allowable costs incurred.The reports are subject to audit.When should the hospital recognize revenues under the grant?

Question

Quizplus · Accepted Answer

The hospital should recognize revenues under the grant as it incurs allowable costs. This is because the eligibility requirement of the grant states that the hospital must incur costs and submit quarterly reports of allowable costs incurred. Therefore, the revenue recognition should correspond to the expenses incurred in relation to the grant.

A Governmental Hospital Receives Notice of a $100,000 Grant from the Federal