1. A foundation pledges to donate $1 million to an art institute one year in the future....

Question:

1. A foundation pledges to donate $1 million to an art institute one year in the future. When, and in what amount, should the institute recognize revenue? The institute applies a of 10 percent to all pledges.
2. Would your response be the same if the foundation promised to donate the funds only if and when the institute held an exhibition of nineteenth century American photography?
3. Why do many not-for-profits object to the standards pertaining to revenue recognition of pledges?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...