On January 1, the Hawaii Cancer Institute has recieved a promise from the Obama
ID: 2471558 • Letter: O
Question
On January 1, the Hawaii Cancer Institute has recieved a promise from the Obama Foundation to receive a building that the Foundation recently appraised at $200,000. However, the building cost was only $125,000. The Cancer Institute promised to keep the building "permanently restriced," i.e., never to sell it and to use it only for its work in helping cancer patients. As of the end of the Cancer Institute's fiscal year (December 31), no title to the building was received by the institute. How should the Institute record this transaction? Facts: Issue: Conclusion: Authorities: Applying Authorities
Explanation / Answer
On the end of the Cancer Institute's fiscal year (December 31), no title to the building was received by the institute, so the journal entry to record the transaction is:
Debit Permanently Restricted Net Assets $200,000
Credit Permanently Restricted Fund $200000
(Building contribution as restricted promised by Obama Foundation, title yet to receive)