Question

A city receives notice of a S150,000 grant from the state to purchase vans to transport challenged individuals. Although the city did not receive any of the grant funds during the current year, the city purchased a bus for $65,000 and issued a purchase order for a van for $60,000. The grant revenue that t current year is he city should recognize in the government-wide financial statements in the а) $-0- b) $ 65,000. c) $125,000. d) $150,000.

Answer 1

Answer:

d.$150,000

Explanation:

The grant is given for purchase of vans for challenged individuals. It means grant is given subject to purchase of vans.

As the vans have been purchased, therefore whole amount is recognized as accrued revenue as it is probable that amount will be received and amount of revenue is also certain/determinable.