Ken Labich promises to give a not-for-profit university $2 million for a new library,but only if the university is able to raise an equal amount in cash from other donors.When should the university recognize Ken's promise as revenue?

Question

Quizplus · Accepted Answer

According to the principle of revenue recognition, revenue can be recognized when the conditions of an agreement are substantially met. In this case, Ken Labich's promise is contingent upon the university raising an equal amount from other donors. Therefore, the university should only recognize Ken's promise as revenue when it has received approximately $2 million in cash from other donors, which would fulfill the conditions set forth by Ken Labich. Option D is the best choice in this scenario.

Ken Labich Promises to Give a Not-For-Profit University $2 Million