Answer the Following Questions with Regard to the Preparation of Fund

Essay

Answer the following questions with regard to the preparation of fund financial statements. A city receives three grants from the state. One grant is received in cash but must be used only for the acquisition of two vans specifically equipped to transport physically challenged citizens who use wheelchairs as a means of mobility. The second grant provides for reimbursement of costs incurred in operating a public transit system. The third grant is a distribution of state general fund revenues allocated to each city in the state based on the population of the city. This grant is to be used in general government operations.
a.) Discuss the various methods of revenue recognition for grants and other similar revenues.
b.) What is the appropriate basis for revenue recognition for each of the three state grants?
c.) What is the rationale for each of these methods of revenue recognition?