Question

the state awards a grant of $50,000 to the town of glenville. the state will pay the grant money to the town as a reimbursement for money spent on road repair. at the time of the grant, the state pays $8,000 in advance. during the first year of this program, the town spent $14,000 and applied for reimbursement. what amount of revenue should be recognized?

Answer 1

The revenue that should be recognized in this scenario is $12,000.

Step-by-step explanation:

The revenue that should be recognized in this scenario is $12,000.

To calculate this, we need to subtract the amount the state paid in advance ($8,000) from the total amount spent by the town ($14,000) and apply for reimbursement. So, $14,000 - $8,000 = $6,000 is the additional amount that the town applied for reimbursement.

Therefore, the total amount of revenue that should be recognized is the amount paid in advance by the state ($8,000) plus the additional amount applied for reimbursement ($6,000), which equals $12,000.