The Following Information Applies to the Next Three Questions

question 48

Multiple Choice

The following information applies to the next three questions:
A private foundation made a multi-year pledge to a private college on December 31, 2013, the last day of the fiscal year. The pledge was to pay $12,000 per year each year for five years, beginning on December 31, 2014. The discount rate is 6%. The present value of five payments of $12,000 is $50,548. The present value of four payments of $12,000 is $41,581. No purpose or plant restrictions were involved.
-The private college would:

• A) Record interest revenue of $3,033 in 2013.
• B) Record interest revenue of $3,033 in 2014.
• C) Record contribution revenue of $3,033 in 2013.
• D) Record contribution revenue of $3,033 in 2014.

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Definitions:

Nonlabor Resources

Resources used in the production process that do not involve human labor, such as capital, land, and raw materials.

Worker

An individual who performs tasks or services for compensation, contributing labor to an economy.

Nonlabor Resources

Inputs used in the production of goods and services that do not involve human labor, such as land, machinery, and materials.