Question

Unrestricted net assets comprised $7,500,000 of assets and $4,500,000 of liabilities (including deferred revenues of $150,000). Among the receipts recorded during the year were unrestricted gifts of $550,000 and restricted grants totaling $330,000, of which $220,000 was expended during the year for current operations and $110,000 remained unexpended at the close of the year.
Volunteers from the surrounding communities regularly contribute their services to Global, which normally purchases them; it pays the volunteers nominal amounts to cover their travel costs. During the year, the amount for travel paid to these volunteers aggregated to $18,000. The gross value of services performed by them, determined by reference to equivalent wages available in that area for similar services, amounted to $200,000. The university believes the contributed services enhance its assets. For the year ended June 30, 20X1, what amount should Global record as contribution revenue for the volunteers' services?

Answer 1

Answer:$200,000

Explanation:

The equivalent amount of wages in the area for the services performed by the volunteer represents the amount that was saved by the firm by using the volunteer for the execution of the services. The sum will be credited into the income statement through a journal and the amount actually paid to the volunteer will be debited to the income statement to leave a net income of $182,000.