Sam Smith Died,leaving a Will That Provided That $1,000,000 Be

question 4

Multiple Choice

Sam Smith died,leaving a will that provided that $1,000,000 be transferred to a not-for-profit hospital.The hospital is to invest the funds for 10 years and give $40,000 each year to the granddaughter.At the end of the 10 years,the $1,000,000 can be used for any purpose desired by the hospital.Which of the following is true?

• A) The hospital would record revenue in the amount of $1,000,000, increasing temporarily restricted net assets.
• B) The hospital would record revenue in an amount equal to the present value of the 10 payments to the granddaughter.
• C) The hospital would record revenue in an amount equal to the $1,000,000 less the present value of the 10 payments to the granddaughter.
• D) The hospital would not record revenue for 10 years; then a revenue would be recorded, increasing unrestricted net assets.

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