A not-for-profit museum holds a collection of historical treasures. It manages the treasures in a manner that meets all three criteria permitting the option to either capitalize the collection or not.
The museum has chosen not to capitalize its collection. It then receives a donation of several items that it intends to sell to help meet operating expenses. How should the museum account for the donated items?
a. It must recognize the fair value of the donated items as revenues or gains and assets when it receives the donation.
b. It has an option either to recognize or not to recognize the fair value of the donated items as revenues or gains when it receives the donation.
c. It may not recognize a revenue or gain until it sells the donated items.
d. It must disclose the donation in the notes to the financial statements, but it may not recognize a revenue or gain until it sells the donated items.
Question 2
Which of the following general ledger accounts normally has a subsidiary ledger?
a. Capital Stock b. Retained Earnings
c. Supplies d. Accounts Payable
