During the current year, a voluntary health and welfare organization receives $800,000 in unrestricted pledges

Accounting Dec 15, 2020

During the current year, a voluntary health and welfare organization receives $800,000 in unrestricted pledges. Of this amount, $300,000 has been designated by donors for use next year to support operations in the pharmacy. what amount of unrestricted support should the organizations recognize in its current-year financial statements?

$800,000
$700,000
$500,000
$400,000

Expert Solution

The correct option is 3rd "$500,000". The unrestricted support, net of expected uncollectibles, recognized in the current year financial statements is $500,000. Although $800000 was pledged $300,000 is effectively temporarily restricted by the time restriction limiting the use of the funds to the following year.

$800,000-$300,000

$500,000

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