When a company is the recipient of a donated asset, the account credited may be aA) revenue account.                                                                                             B) deferred revenue account.                                                                            C) paid-in capital account.                                                                                    D) all of these answers are correct.

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Asked Dec 8, 2019
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When a company is the recipient of a donated asset, the account credited may be a

A) revenue account.                                                                                             B) deferred revenue account.                                                                            C) paid-in capital account.                                                                                    D) all of these answers are correct.

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Expert Answer

Step 1

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
Step 2

Journal entry for the receipt of donated assets:

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Credit Post Debit Account Titles and Explanation Date Ref. (S) (S) Assets account XXX Revenue account XXX (To record the receipt of donated assets)

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Step 3

In this case, donated asset is considered as the revenue of the company and credit increases the value of rev...

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