In response to a fund-raising campaign,an electric utility provides free electricity to a not-for-profit entity.How should the not-for-profit entity report this gift in its statement of activities?

Question

Quizplus · Accepted Answer

The not-for-profit entity should report the gift of free electricity at its fair value as both revenue and an expense in its statement of activities. This reflects the contribution received (increasing revenue) and the utility expense incurred (increasing expenses), even though cash was not exchanged.

In Response to a Fund-Raising Campaign,an Electric Utility Provides Free