Green Hills County received the following two contributions during a year:
• A developer (in exchange for exemptions to zoning restrictions) donated several acres of land that the county intended to convert to a park. The land had cost the developer $1.7 million. At the time of the contribution its fair market value was $3.2 million.
• A local resident donated several acres of land to the county with the understanding that the county would sell the land and use the proceeds to fund construction of a county health center. The land had cost the resident $2.5 million. The county sold the land intended for the health center for $3 million thirty days after the end of its fiscal year.
1. Prepare journal entries to record the contributions. Be sure to specify the appropriate fund in which they would likely be made.
2. Comment on and justify any differences in the way you accounted for the two contributions.
3. Comment on how each of the contributions would be reported on the county’s government-wide statements.
4. How would your answers differ if the land intended for the health center were not sold by the time year-end financial statements were issued?