A firm received an asset as a donation from a shareholder. However, the shareholder imposed a condition to be met before title transfers to the firm. The firm will be unable to meet the condition during the current fiscal year. How should the firm account for this donated asset?

Question

Quizplus · Accepted Answer

The firm should credit a liability to reflect the obligation they have to meet the condition imposed by the shareholder before title transfers to the firm. No revenue should be recognized until the condition is met.

A Firm Received an Asset as a Donation from a Shareholder