2. Wilson Center is a private not-for-profit voluntary health and welfare entity

Question

2. Wilson Center is a private not-for-profit voluntary health and welfare entity. During 2017, it received unrestricted pledges of $683,000, 64 percent of which were payable in 2017, with the remainder payable in 2018 (for use in 2018). Officials estimate that 10 percent of all pledges will be uncollectible.

a. How much should Wilson Center report as contribution revenue for 2017? (Ignore time value calculations.)

b. In addition, a local social worker, earning $37 per hour working for the state government, contributed 600 hours of time to Wilson Center at no charge. Without these donated services, the organization would have hired an additional staff person. How should Wilson Center record the contributed service?

a.

Contribution revenue

?

b.

Contributed service

?

a.

Contribution revenue

?

b.

Contributed service

?

Explanation / Answer

a. Contributed revenue:

Unconditional pledges will be reported as revenue at their net realisable value.

In 2017 64% of the total pledges are payable. Amount of payable= 683000*64%= 437120

Net realisable value= 437120*90%= 393408

Contributed revenue= 393408

b. Contributed service:

Amount of contributed service will be recognised as revenue, if they require special skill and otherwise they could have been purchased from outside.

Amount of contributed service= 600*37= 22200

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