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.

Question

Quizplus · Accepted Answer

Governmental fund financial statements use the modified accrual basis of accounting, which does not recognize revenue until it is both measurable and available. Since the building has not been sold yet, no revenue is recognized.

A Governmental Entity Is the Recipient of a Bequest of a Multi-Story