A Firm Received an Asset as a Donation from a Shareholder

question 179

Multiple Choice

A firm received an asset as a donation from a shareholder. However, the shareholder imposed a condition to be met before title transfers to the firm. The firm will be unable to meet the condition during the current fiscal year. How should the firm account for this donated asset?

• A) Debit a liability
• B) No recognition is necessary until the condition is met
• C) Credit revenue
• D) Credit a liability

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Definitions:

Two-switch AND Gate

A basic digital logic gate that outputs a high signal or true only if both input signals are high or true.

Output

The result or product of a system's process, typically referring to power, data, or material produced by a system or device.

Light Emitting Diode

A semiconductor device that emits light when electric current flows through it, commonly used for indicators, displays, and lighting.

Digital Display

An electronic screen or panel that shows information in visual form through digits, often found in devices like clocks, meters, and dashboards.