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A government establishes a Permanent Fund to account for a donation. The earnings from the donation...

A government establishes a Permanent Fund to account for a donation. The earnings from the donation are to be used to purchase books for the library but the donated amount must be maintained intact. How should the donation be reported in the Permanent Fund statement of revenues, expenditures and changes in fund balance?

A. Special Item.

B. Revenue.

C. Other financing source.

D. Capital contribution.

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Answer #1

Since the donation needs to be maintained intact. It will be considered as a capital contribution. Hence answer is option D.

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