Ken Labich Promises to Give a Not-For-Profit University $2 Million

question 5

Multiple Choice

Ken Labich promises to give a not-for-profit university $2 million for a new library,but only if the university is able to raise an equal amount in cash from other donors.When should the university recognize Ken's promise as revenue?

• A)when it receives Ken's promise
• B)when it receives Ken's promise,provided it also fully discloses (in notes to the financial statements)the conditions set forth in Roger's promise regarding other contributions
• C)gradually;that is,each time it receives cash from another donor,the entity would recognize a portion of Ken's promise as revenue
• D)when the conditions imposed by Ken are substantially met;that is,when it receives approximately $2 million in cash from other donors

---

Definitions:

Injunctive Norms

Socially accepted rules or standards that dictate the behaviors that are approved or disapproved of within a society or group.

Evaluative Component

Part of an attitude that involves making a judgment about the goodness or badness of an object, person, or event.

Busy New York City Subway

Busy New York City Subway describes the condition of New York City's subway system, often characterized by high passenger traffic and congestion.

Descriptive Norm

Social norms that describe what most people do in a specific context, rather than what they should do.