Directions for each transaction indicate whether you think

Assignment Help Accounting Basics

Reference no: EM13590521

1. A college of pharmacy receives a grant of $2 million from a drug company to carry out research on a new formulation. The college agrees to submit the results to the company and to publish them only with the company's approval.

2. A city charges a developer an "impact fee" of $15,000 to compensate, in part, for improvements to the infrastructure in the area in which the developer plans to build residential homes. The city will make the improvements when construction on the new homes gets underway.

You are the independent auditor of various governments. You have been asked for your advice on how the following transactions should be accounted for and reported. Characteristic of each transaction is ambiguity as to whether it is an exchange or a nonexchange transaction.

Directions: For each transaction indicate whether you think it is an exchange or a nonexchange transaction and make a recommendation as to how it should be accounted for (i.e., the amount and timing of revenue recognition). Justify your response. Note: The GASB has not explicitly distinguished between exchange and nonexchange transactions. Hence, in this problem, you should consider how you think the transaction should be accounted for; you need not be limited by current GASB standards.

Reference no: EM13590521

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