Group efforts to assist victims of violent crimes


Task: Suppose that a foundation's formal letter acknowledging its pledge was worded in 3 different ways:

1. "We are pleased to pledge $100,000 in support of your group's efforts to assist victims of violent crimes."

2. "We are pleased to pledge $100,000 in support of your group's efforts to develop a new program to provide legal assistance to victim's of violent crimes."

3. "We are pleased to pledge $100,000 upon your developing a new program to provide legal assistance to victims of violent crimes."

For each of the 3 options:

1) Prepare the journal entries that should be made upon receipt of the letter from the foundation. Assume that it was unlikely that the pledge would be fulfilled in the same period as it was made.

2) Prepare the journal entries that should be made to record the expenditure of $100,000 on activities related to the legal assistance program.

3) Prepare the journal entries that should be made upon receipt of the $100,000 check, assuming that it was received shortly after the legal assistance program was established and the group spent the $100,000 on program related activities.

4) Comment on why minor differences in wording might justify major differences in accounting.

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Accounting Basics: Group efforts to assist victims of violent crimes
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