If a private university receives $1,000,000 in the current fiscal year as a grant restricted for a specific research project and makes expenditures amounting to $400,000 during the current fiscal year properly chargeable to the grant, how much should be reported as revenues in the current fiscal year? Explain.
Assuming the grant is considered a nonexchange transaction, then the entire $1,000,000 should be reported as revenue. Gifts, provided all eligibility requirements have been met.
If the grant is determined to be an exchange transaction (i.e. the research is being provided for the benefit of the government), then only the amount expected for the purpose described in the grant would be recognized as revenue in fiscal year. the remainder would be reflected in deferred revenue.
I hope this clear your doubt.
Feel free to comment if you still have any query or need something else. I'll help asap.
Do give a thumbs up if you find this helpful.
Get Answers For Free
Most questions answered within 1 hours.