The Cats and Dogs League was organized as a nongovernmental not-for-profit organization. The League received a pledge of $10,000 to be used to build an addition to the kennel. This donation will not be received for three years. How should this pledge be recorded?
a. It should not be accounted for until it is received.
b. As a conditional promise to give of $10,000.
c. As temporarily restricted support of the present value of $10,000.
d. As temporarily restricted support of $10,000.

a. It should not be accounted for until it is received.

Explanation:

When a donor make a promise to make a donation of certain amount of money to a not-profit-organization, the amount is referred to as a pledge.

There are two important variations of a pledge depending on the conditions attached to it. These variations have to be considered when the pledge is being accounted for. The following are the two variations:

1. Unconditional pledge: This occurs when a pledge is committed to by a donor without any reservation. In this case, the funds will be recorded as revenue and an account receivable by the not-for-profit organisation that is receiving it.  

2. Conditional pledge: This occurs when a pledge is committed to by a donor but with a condition to be met attached to it. That is, the donor promises the organisation certain amount of money contingent upon some future event. In this case, the not-for-profit organisation will not record anything. The organisation has to wait until the condition is met. When the condition is eventually met, the pledge will then be recorded as revenue and an account receivable.

The

Since a pledge of $10,000 received by the League has a condition attached to it that the donation will not be received for three years, that is, it will not be received until after three years, the pledge is considered as a conditional pledge. Therefore, the League will not record anything until after it receives the pledge.

Therefore, the Cats and Dogs League should not be accounted for until it is received.

I wish you the best.

D

Explanation:

Regardless of whether or not interest is earned on her savings, we try to caculate each option

A. $600 per month for 1 year  = 600*12 = 7200 (not enough)

B. $350 per month for 2 years  = 350*12*2 = 8400 (not enough)

C. $225 per month for 3 years = 225*12*3 = 8100 (not enough)

D. $200 per month for 4 years = 200*12*4 = 9600 Enough