Question

For each of the following situations, indicate whether the organization should recognize the described contributed services as revenue (offset by a corresponding expense). Briefly justify your response or identify key issues. 1. Nellie Wilson, the noted country-and-western singer, performs a benefit concert for the Save Our Farms Association, a political advocacy group. Wilson, who would normally charge $60,000 per concert, did not accept a fee. 2. Camp Chi-Wan-Da, a summer camp for disadvantaged youth, benefits from the services of four physicians, each of whom spends two weeks at the camp providing medical services to the campers. The doctors receive free room and board but no salary. Camp Association standards require that a camp of Chi-Wan-Da’s size either have a physician on premises or have a physician on call. 3. The Taconic Music Festival, a performing arts association, needed new practice facilities. The architecture firm of Lloyd Wright-designed the facilities for the association without charge and local merchants provided the building materials. All construction work was carried out by community volunteers, only a few of whom had professional experience in the building trades. 4. A neurologist serves on the board of trustees of the Neurological Disease Foundation, an organization that funds clinical research. He was asked to serve because of his expertise in neurological research, and he chairs the committee of the board that selects grant recipients. 5. Daughters of Charity Hospital draw its nursing staff from members of its religious order. The nurses are not paid a salary. Instead, they receive free room and board and a living allowance. The total cost to the hospital is approximately 60 percent of what it would have to pay in salary and benefits on the open market. In addition, the hospital benefits from the services of “candy stripers” and other volunteers who staff the hospital’s gift shop, carry meals to patients and perform a variety of other important functions. Were it not for these volunteers, the hospital would be required to hire additional personnel to carry out many of their duties.

Answer 1

Answer:

1. Wilson's service of $ 60,000 should be recognised in the books of organisation.
2. the services of four physicians for two weeks should be recognised .
3. Architecture firm of Lloyd Wright designed the facilities for the association should be recognised but no recognition for community volunteers.
4. neurologist service should be recognised in the books.
5. Nurses services should be recognised but services of "candy stripers" and other volunteers who staff the hospital's gift shop, carry meals to patients, and perform a variety of other important functions should not be recognised.

Step-by-step explanation

Contributed services are recognized as revenue for a private not for profit when the service only when services required specialized skills, is provided by someone possessing those skills, and typically would be purchased if not provided by donation.

In the given scenarios:

1.Wilson is professional and have specialized skills.

2. Physicians are professional and have specialized skills

3. Architecture firm lloyd wright is professional but community volunteers are not specialized so there services not recognised.

4. neurologist service highly skilled and renowned for his specialization- recognised.

5. Nurses are skilled and specialised but candy stripers volunteered, they are not at all skilled and specialized and should be recognised typically would be purchased if not provided by donation.