Types and Forms of Pledge

Transactions And Determining Outcomes
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Transactions And Determining Outcomes
A pledge is a promise to give or donate a certain amount of money to an organization. In some cases, a pledge could be given in the form of an asset. Non-profits rely heavily on pledges for their operations. Hence, all pledges have to be well-recorded (Chase et al., 2018). Once a pledge has been made, an organization has to confirm the donor’s commitment. This can be done by preparing and signing an agreement that lays out all the terms of the pledge (Chase et al., 2018). Having a written agreement helps the organization avoid any problems in the future. Also, it provides a written understanding of the type of pledge being made.
Question One
In accounting, pledges are divided into conditional or unconditional. Conditional pledges are given with specific requirements (Jeter & Chaney, 2018). The organization receiving the pledge is required not to record it in its books until the condition is met. Unconditional pledges, on the other hand, have no requirements (Jeter & Chaney, 2018). Therefore, the organization has the liberty to use the money for any purpose. When an unconditional pledge is given, the organization has to record it as revenue. However, when a conditional pledge is given, the organization must wait until the condition is met before recording the pledge as revenue (Jeter & Chaney, 2018). In the case of Lucky Duck University, the pledge is unconditional. Hence, every payment made throughout the four years has to be re...