Faculty salaries are a major expense of a university that received IRC Section 501(c)(3) tax-exempt status. Of the total faculty, 80 percent are compensated faculty members and 20 percent are uncompensated faculty members who are associated with religious orders and contribute their services to the university. The performance of both compensated and uncompensated faculty members is regularly and similarly evaluated; both must meet the university’s standards and both provide services in the same way.

The university also conducts an annual fundraising campaign to solicit contributions from its alumni. The university recruits unpaid student volunteers to make phone calls to its alumni. The student volunteers contribute over 100 hours making the calls.

Based on the above information, discuss the following:

1.   Would the university recognize donated service revenue and the appropriate expense for the services contributed by the uncompensated faculty members? Discuss why or why not.

2.   Would the university recognize donated service revenue and the appropriate expense for the services contributed by the student volunteers? Discuss why or why not.

Answer rating: 100% (QA)

ANSWER 1 Donated services that meet the requirements for recognition in the financial statements should be reflected on the Statement of Activities as ... View the full answer