Question 1

Riverside NFP received the following contributions during Year 1:
- $100,000 cash contribution with no donor restrictions
- $75,000 cash contribution restricted for program services in Year 2
- $50,000 pledge receivable (unconditional promise) restricted for capital improvements, due in Year 3
- Volunteer services valued at $25,000 for specialized accounting work that would otherwise be purchased

What total amount should Riverside NFP recognize as contribution revenue in Year 1?

Accepted Answer

Identify each contribution type: unrestricted and restricted cash are recognized immediately, unconditional pledges are recognized when promised regardless of payment timing, and volunteer services are recognized if they require specialized skills that would otherwise be purchased.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Deferring restricted contributions until restrictions are met, not recognizing pledges until cash is received, or omitting volunteer services that meet recognition criteria

How to approach this question

Full Answer

Common mistakes

Practice the full CPA FAR Practice Exam 2

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