Open Air Conservatory, a Not-For-Profit Entity, Held a Fund-Raising Drive

question 16

Multiple Choice

Open Air Conservatory, a not-for-profit entity, held a fund-raising drive to raise money to buy land to provide a habitat for the endangered Sleepy Eagle. A donor pledged $1 million to the project provided that Open Air Conservatory was able to raise an additional $1.5 million from other sources. What entry should Open Air Conservatory make at the time of the $1 million pledge?

• A) Debit Pledge receivable $1 million; Credit Unrestricted revenue $1 million.
• B) Debit Pledges receivable $1 million; Credit Restricted revenue $1 million.
• C) Debit Pledges receivable $1 million; Credit Grant revenue $1 million.
• D) No entry is made at the time of the pledge.

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Definitions:

Equity Method

An accounting technique used by companies to assess the profits earned by their investments in other companies, where they hold significant influence but not full control.

Excess Amortizations

Amortization expenses that exceed the norm or expectation for a particular asset, typically resulting from an aggressive estimation of the asset's useful life or value.