Assume that a wealthy alumnus donated $1 million to Chavis University to provide loans to qualifying students.
Question:
Assume that a wealthy alumnus donated $1 million to Chavis University to provide loans to qualifying students. Though not required by the donor, the university’s Board of Trustees voted to supplement the initial establishment of the loan fund with a $500,000 dedication of its own unrestricted resources. Further assume that any interest earned on the loan funds is to be added to the underlying principal of the fund and that both the original principal and that from earnings may be loaned.
What amount of revenues would be reported in GAAP-based financial statements on the date of donation?
a. $0
b. $500,000
c. $1,000,000
d. $1,500,000
Step by Step Answer:
Governmental And Nonprofit Accounting Theory And Practice
ISBN: 9780132552721
9th Edition
Authors: Robert J Freeman, Craig D Shoulders, Gregory S Allison, Terry K Patton, Robert Smith,