Doctor Strange (DS) is a not-for-profit organization set up to research reducing the use of pesticide on Canadian and in

[answerhappygod]

Doctor Strange (DS) is a not-for-profit organization set up to
research reducing the use of pesticide on Canadian and
international farms. It is being funded by an annual government
grant of $525,000 for each of the next 5 years. DS has recently
completed its first year of operations and has come to you for
advice regarding its first set of financial statements for the year
ended December 31, 2019. DS’s accounting systems are run by Joseph,
who has several years experience from the accounting department of
a major farm coop, but who has never done not-for-profit
accounting. It is now January 15, 2020 and Joseph would like to set
up accounting policies that can be used for a least the term of the
government grant. He has specifically asked that you provide advice
on the following issues.
REQUIRED:
a) Doctor Strange completed its first fundraising campaign in
December 2019. It was successful and resulted in pledges totaling
$100,000, for use at management’s discretion, to be collected in
March 2020. Joseph is hopeful that 95% of the pledges will be
collected.
ai) Explain whether the pledges can be set up as an asset on the
statement of financial position as at December 31, 2019.
aii) Disregard your answer to (i) and assume that the pledges
can be recorded for financial statement purposes. Prepare the
journal entry that would be recorded. (3 marks)