[shawnl112]

The Jasper Foundation, Inc., a not for profit organziation, operates from a building it owns in Knoble Knob Hamlet. The holding company of the Knoble Knob Electric Authority contributes power service to the Jasper Foundation. Jasper Foundation would display or disclose the contributed utilities as:

A. Disclosure only relative to donated service with no valuation
B. Revenue and expense in the period received and used at cost
C. Disclosure only relative to donated service valued at donor cost
D. Revenue and expense in the period received and used at fair value

Choice D is correct. But the explanation sates receipt and use of unities is a form of contributed assets and not services. The foundation would recognize the Fair value of the contributed electricity as both revenue and expense in the period it is received.

Usually if it is service then the Journal entry would be

DR: Expense X
CR: Contributed support revenue X

However, since it is not like services but a form of asset. Is the correct journal entry

DR: Asset X
CR: Contributed support revenue

But we would not have an expense in this case. Please let me know the Journal entry. Thanks.

[Anonymous]

Electricity is not an asset. It’s being supplied so it should be expensed not capitalized.

My JE would be:
DR: Expense (Utilities/Electricity) xx
CR: Contributions (Revenue) – Support xx

[Anonymous]

I agree with Amor, if someone donates services to a not for profit, the NFP recognizes the contribution and simultaneously an expense in the amount of the fair value of services donated.

[Author]

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