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Could someone explain me when to recognize deferred inflow of resources and Uneared Revenue for Governmental Accounting? Looking at the MCQ below and with the correct answer I am a little confused:
Progressive Township Community College received $900,000 multi year research grant available for use on a pro-rata basis over the next three years subject to other enrollment based eligibility requirements. At the end of year 1 of the grant, the college had achieved enrollment levels that satisfied grant eligibility requirements below equal to $500,000. As a result of this transaction, the community college would recognize:
The correct ansder is
a. Revenue $300,000 Deferred Inflows of resources $200,000 Unearned Revenue $400,000j
My confusion stems from the recognition of deferred inflow of $200,000. What is the reason we are not recognizing theole $600,000 as an unearned revenue? Thanks a lot for the explanation.
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