How should hope city characterize grant agreement

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In January 2019, City Hope received a 2-year, $800,000 grant from the Veterans of Foreign Wars (VFW) to provide specific career training to disabled veterans. City Hope is required to submit to the VFW quarterly reports of the grant related expenses. At the end of the grant period, any unused assets are forfeited, and any un-allowed costs must be reimbursed. During the year, City Hope incurred $425,000 in expenses related to the new veterans' training program and filed three quarterly reports with the VFW.

Problem 1. How should Hope City characterize grant agreement (contribution or exchange)? Explain the reasoning behind your decision.

Problem 2. How should the agreement be reflected in the 2019 financial statements? In your answer, include the amounts and descriptions to be reported in each of the financial statements.

Reference no: EM132704164

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