In January, 2013 Kirkland University receives a pledge of $200,000, to be used exclusively to support research in a specialized area of communication disorders. The university’s ﬁscal year ends on July 31.
In December 2013 (the following ﬁscal year), Kirkland receives the pledged contribution of $200,000 and spends $150,000 on qualifying research.
1. Prepare all required journal entries to reﬂect the transactions described. Indicate the type of fund in which the entries should be made.
a. Assume ﬁrst that Kirkland is a private not-for-proﬁt university.
b. Assume instead that Kirkland is a public university and that it elects to report as a special-purpose government that is engaged in only business-type activities.
2. On what grounds, if any, can you justify different accounting principles for the same transaction depending on the type of institution (public or private) or the assumption as to type of public institution?