Asset Acquired by Donation
Response to the following problem:
The city of Littleton donated a building and land to the Hetting Co. without charge. The agreement provided that the company employ 350 people for 10 years. The land was appraised at $65,000 and the building at $44,000.
Required
1. Prepare the journal entry to record the acquisition of the land and building.
2. How should the 10-year agreement be reported in the financial statements?
3. If the title were not to pass until after 10 years, would your answer change?