A large corporation Laplata Industries has decided to donate $10 million to the Children's Hospital here in Virginia Beach. The pledge states that the contribution will look as such: $4 million by 12/31/21; $4 million by 12/31/22; and $4 million by 12/31/23. The borrowing rate for Laplata industries is 6%.

Please use the FASB codification guidance and draft an accounting issues memo and an email to the client answering the questions below. 

 

1. How is the contribution reported at the inception of the agreement?

2. How does Laplata Industries report the contribution in its financial statements for years ending 12/31/21, 12/31/22 and 12/31/23?

3. Are any disclosures required?

Answer rating: 100% (QA)

Accounting Issues Memo Subject Reporting of Contribution to Childrens Hospital by Laplata Industries FASB Codification References ASC 958605 NotforPro... View the full answer