Question

A governmental entity is the recipient of a bequest of a multi-story office building that the government intends to use as a new city hall. The building has a historical cost of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000. The city should recognize on its governmental fund financial statements, donations revenue of
a) $-0-.
b) $700,000.
c) $850,000.
d) $1,050,000

Explanation to why answer is d

A governmental entity is the recipient of a bequest of a multi-story office building that the government intends to sell to support program activities. The building has a historical of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000. The city had not yet begun to try to sell the building when its annual financial statements were issued. The city should recognize on its governmental fund financial statements, donations revenue of
a) $-0-.
b) $700,000.
c) $850,000.
d) $1,050,000

Explanation to why answer is a

Answer 1

Answer:

Question 1:

The correct answer is option(d). $1,050,000.

Explanation:

In the given inquiry we have been furnished with the data that Government in the beneficiary of an endowment of a multi-story place of business having the verifiable expense of $850,000; a book an incentive in the hands of the supporter of $700,000; and a reasonable estimation of $1,050,000. the administration plans to utilize it as another city corridor. This implies the administration needs to utilize its capital resource (multi-story place of business ) for the utilization of new capital venture (new city corridor).

According to GAAP the gave capital resources ought to be recorded at their reasonable estimation of the benefit as of the date on which gift is being made .

For this reason, we can see reasonable incentive as alluding to what it would have cost the administration to secure the advantage, not the exchanging measure of the advantage. Subsequently The city ought to perceive on its administrative reserve fiscal reports gifts income at reasonable esteem.

Question 2:

The correct answer is option(d). $1,050,000​​​​​​​.  

Explanation is same as above question.