Problem - Donation-Related Entries
Mr. Larry Leininger donated $3,000,000 to a non-government VHWO on June 17, 20X8.
1. Assume that no restrictions are placed on the use of the donated resources.
a. Prepare the required June 17, 20X8, entry.
b. Prepare any entries necessary in 20X9 if $400,000 of the gift is used to finance VHWO operating expenses.
2. Assume that the donation was restricted to research.
a. Prepare the required June 17, 20X8, entry.
b. Prepare the entries required in 20X9 as a result of spending $400,000 for research during 20X9.
3. Assume that the donation was restricted for fixed asset acquisitions.
a. Prepare the required June 17, 20X8, entry.
b. Prepare any entries required in 20X9 if $400,000 of the gift is used to purchase a new building. The building is placed in service at year end.
4. Explain or illustrate how each of the three preceding situations would be reported in the nongovernment VHWO's financial statements in 20X8 and in 20X9.