disposal. The shelter has a December 31 year end and uses the deferral method. What journal entry correctly accounts for the building and contribution revenue in the financial statements for the year ending December 31, 2026? quisido and

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 39P
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Aukey Smith contributed $1,000,000 to the local homeless shelter on November 1, 2025, stipulating that the
contribution be used to purchase a building to provide additional beds for the homeless. The building was purchased at
à cost of $1,200,000 on March 31, 2026, with $200,000 coming from surpluses in the general fund. The building has an
estimated useful life of 15 years, with no residual value. The shelter capitalizes its capital assets and uses the straight
line method to amortize its capital assets, pro-rating for the number of months owned in the years of acquisition and
disposal. The shelter has a December 31 year end and uses the deferral method. What journal entry correctly accounts
for the building and contribution revenue in the financial statements for the year ending December 31, 2026?
50,000
O
Dr. Deferred contribution liability
Cr. Contribution revenue
Dr. Amortization expense
Cr. Capital asset-accumulated amortization
Dr. Deferred revenue
Dr. Amortization expense
Cr. Capital asset
Dr. Deferred contribution liability
Dr. Amortization expense
Cr, Contribution revenue
Dr. Deferred contribution liability
Cr. Contribution revenue
Dr. Amortization expense
Cr. Capital asset-accumulated amortization
60,000
50,000
50,000
50,000
60,000
60,000
60,000
50,000
60,000
100,000
110,000
60,000
60,000
Transcribed Image Text:Aukey Smith contributed $1,000,000 to the local homeless shelter on November 1, 2025, stipulating that the contribution be used to purchase a building to provide additional beds for the homeless. The building was purchased at à cost of $1,200,000 on March 31, 2026, with $200,000 coming from surpluses in the general fund. The building has an estimated useful life of 15 years, with no residual value. The shelter capitalizes its capital assets and uses the straight line method to amortize its capital assets, pro-rating for the number of months owned in the years of acquisition and disposal. The shelter has a December 31 year end and uses the deferral method. What journal entry correctly accounts for the building and contribution revenue in the financial statements for the year ending December 31, 2026? 50,000 O Dr. Deferred contribution liability Cr. Contribution revenue Dr. Amortization expense Cr. Capital asset-accumulated amortization Dr. Deferred revenue Dr. Amortization expense Cr. Capital asset Dr. Deferred contribution liability Dr. Amortization expense Cr, Contribution revenue Dr. Deferred contribution liability Cr. Contribution revenue Dr. Amortization expense Cr. Capital asset-accumulated amortization 60,000 50,000 50,000 50,000 60,000 60,000 60,000 50,000 60,000 100,000 110,000 60,000 60,000
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