 Hello and welcome to the session in which we would look at the revenue recognition but for governmental activities. And specifically, we're gonna be looking at fund accounting because we're gonna be using for fund accounting. If you remember, we used modified the cruel accounting. So when it comes to revenue, there are special rules that we have to use with revenue recognition, not the rules that we use for private accounting, the rules that we use for governmental accounting. But it's worth kind of going back and remembering, what is modified the cruel accounting? Yeah, let's go back, modified the cruel accounting focuses on the current financial resources, focus on what's expendable financial resources, such as current assets, cash, receivable, marketable securities, prepaid and supplies. So that's what modified the cruel accounting focuses on. Current financial resources, simply put, if we focus on current financial resources, that means we have no accounts for land, no accounts for building, no accounts for equipment, simply no long-term assets or no long-term liabilities because we only focus on current financial resources and current financial obligation, which is current assets and current liabilities. Now, in the prior session, we looked at the budgetary accounting. We started with the budgetary accounting. Now we're gonna look at activities and specifically we're gonna look at revenue activities because we're gonna be illustrating how the revenue recognition works in governmental accounting. Before we proceed, I would like to invite you to visit farhat-lectures.com. Farhat accounting lectures is a supplemental educational tool that's gonna help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple-choice questions, true-false questions, as well as exercises. Go ahead, start your free trial today. No obligation, no credit card required. So as far as we're concerned, Gaspi Statement 33 covers the revenue recognition if you're interested in knowing where is it covered. Now let's talk about the revenue recognition for for profit for a regular business. Well, for profit, if you remember, revenue is earned. So revenue is earned and realized or realized. Also for private business, for them to earn the revenue, they have to earn it. In other words, they have to complete the work in order to earn the revenue. Well, the government does not earn the revenue. The government does not work to generate the revenue, okay? So it's a little bit different. The concept is a little bit different. Why do government generate revenue for what purpose? Well, it's not for motive purposes. The government generate revenue to meet expenditure. What is expenditure? Well, we talked about expenditure. Expenditure is what the government is going to spend for a particular period. For example, the government, they create a budget and first they have what we call appropriations, how much they can spend. Then the appropriation, sometime it goes into the incumbrances account. Then from the incumbrances account, it goes into expenditures, okay? So eventually what's going to happen, whatever we said we're going to spend, it's going to be spent. So expenditure, expenditure, what drives revenues? So the government says, we're going to spend a million dollar for year one or 2018, okay? Now what they do, they have to come up with revenues. So first they determine their expenditure. Basically it's the reversal of for-profit accounting. For-profit accounting, it's the opposite. For-profit accounting, first you determine your revenues. Then you say, here are the expenses that generated the revenue. So first you worry about the revenues. Not in the case of government accounting. So it's the matching principle in reverse. So it's the matching principle in reverse. And this is an important concept for you to understand why revenue is recognized a certain way. So what do we consider revenue? We consider revenue, any revenue that's available in 2018 to meet the expenditure. So any revenue that's available for 2018 to meet the expenditure will be revenues. So revenue is driven by expenditure. So expenditure, what drives revenue? It doesn't make any sense, but that's reality because government don't earn revenue. They don't work to generate revenues. So revenue match into corresponding expenditure. So we generate the revenues to match the expenditure. Kind of it's in La La Land, but that's the truth. That's how the government, they decide how much they want to spend, then they would raise money. Think if you can do that. Think if, how much would you like to spend? I like to spend a lot of money. Now, generate the revenue. Well, I have to work for it. It's not easy, but the government, first they determine how much they want to spend, then they generate the revenue by obviously raising taxes. So this is basically the idea of the revenue recognition and accounting. So what's the rule then? What's the rule? The rule is recognized revenue and it's measurable. Measurable means we can assign a dollar amount for it and it's available to finance expenditure of the current period. That's what revenue is. Anything that's gonna help us finance the expenditure. So for example, in 2018, so here's what happened. Here's how we do it. So if we're looking at 2018, and this is 2019, so what we say is this. So any revenues we're gonna generate to cover 2018, okay? If it's measurable in 2018 and available, plus what's gonna happen, what is available? Available means it's due in the current period. So due in 2018 or 60 days after or 60 days in 2019. For 2018, any revenue we're gonna generate in 2018 plus any revenues we're gonna generate for the first 60 days in 2019 is considered revenue for 2018. Why? Because if you think about it, the revenues that we generate in 2019, it's gonna pay for some expenditure. Think about this. When the government buys stuff, goods and services on account, they might buy it here toward the end of the year. Now the bill is not due maybe until 2019. Then that's an expenditure for 2018 and we're gonna have some revenues at the early 2019 that's gonna meet that expenditure that we're gonna pay for that we generated in the late 2018. Therefore, what we say is any revenue that's due in that year plus the first 60 days, those two. So this area here in the 60 days, that's what revenue. So basically we can put 2018 plus 60 days in 2019 is the revenue we're gonna generate, we're gonna record in 2018. So that's the revenue that's gonna pay for the 2018 expenditure. That's what we're saying. Now we said 60 days, 60 days is a benchmark. Some government can reduce their following year timeframe to 30 days to 60 days or they could move it to a year. So it doesn't matter. We're gonna be assuming most of the time available means it's due this period or 60 days in the following year. Cash collection must be reasonably assured before revenue can be recognized. So we have really to have a good assurance must be reasonably assured before we say the revenue is recognized, before we can recognize the revenue. So if we're waiting to be paid within 60 days, we're pretty sure that we're gonna be paid within 60 days. This is what we mean by reasonably assured. Now the government will involve itself in two types of broad transaction. One is a non-exchange and one is an exchange. And without explaining the exchange transaction, exchange is when you give something of value and you receive something of equal value. So if you paid $100, you're gonna get value of exactly $100, okay? So you pay or you receive the value of this equal amount. Non-exchange transaction, which is government raised most of the revenue from non-exchange transactions. So what are non-exchange transaction? Before we look at non-exchange transaction, let's look at an actual revenue recognition principle for a company. So it's not for a company, for a city. And this is the city of Louisville. So the city of Louisville, here's how they describe the revenue recognition. The revenue resulting from exchange transaction in which each party gives and receive essential equal value is recorded on a cruel basis when the exchange take place. So basically the first statement, they're explaining how do they account for exchange equal exchange. And basically for equal exchange, it's easy. If it's an equal exchange, they use a cruel basis, which is something that we should be familiar with accrual accounting. Then they also used the modified basis, modified accrual basis. So when did they use the modified accrual basis? On a modified accrual basis, revenue is recognized in the physical year in which the resource are measurable. So we can put a dollar amount on the resource and they became available. And here they explain what's available means. Available means that the resources will be collected within the current physical year. So this year that they're looking at or expected to be collected soon enough thereafter to be used to pay liabilities. And here's what do they mean by soon thereafter? Well, they define it as 60 days. Again, this is the benchmark, but it doesn't have to be, but the city of Louisville, that's what they use. They use the 60 day benchmark. Now let's go ahead and look at non-exchange. What does it non-exchange transaction mean? Because exchange is easy. In the real world, we use exchange transactions. So non-exchange transactions are external event in which the government gives or receive value without directly giving or receiving equal value in exchange. So when the government provide benefits, for example, when they provide benefits to the poor or when they maintain the road, they don't expect to be paid of equal value. So if you use the road, sometimes you pay at all, but that doesn't mean you're paying exactly what you're getting. Okay, so, or let's assume, good example will be welfare benefit. When the recipient received the welfare benefit, they're not giving anything in return of equal value. Of equal value. So this will be an example of external event in which the government gives or receive or when you pay your property taxes, just because you pay more taxes, it doesn't mean the government is gonna give you more benefit. You and your neighbor, you pay more taxes than your neighbor. You don't get any additional benefit. So the exchange is unequal, okay? So the consideration flowing in one way, either the government receiving more or they're paying more for what they're getting, okay? In the business world, remember, in the real world, value flow both ways. One party providing resources without directly receiving equal exchange, this is not how we do things, okay? So economics makes sense for profit entities. So in the real world, for profit entities, economic makes sense. And that's why revenue recognition is kind of, is peculiar, it's different when it comes to government, okay? Because it depends on, it doesn't depends on the earning. You're not earning your revenue. You're not earning your revenue. So revenue depend on time requirements. It means revenue has to be recognized in the proper period. What's that proper period? It's the period to meet the expenditure. So the revenues has to meet the expenditure. So it has a time requirement. And some non-exchange transaction we'll see later will have to meet eligibility requirement. And we'll see later what do we mean by eligibility requirement. But to kind of to give you an idea, sometimes someone might give you money. So someone might give you, not you, but gives the government money or some other government might give the city or the local government money, but they put conditions, conditions on that money. Conditions such as you can only spend it for a certain purpose or you can only spend it in 2019 or in 2020. So what happened is that's an eligibility requirement you have to meet, okay? So they could put conditions and you cannot recognize the revenue until those conditions are meet. So that's why the government, simply put the government don't earn revenue. So when we recognize the revenue, we have to have specific rules, okay? The general rule is if the money is available to meet this year expenditure and the money is measurable, then it's revenue. Unless there's condition attached to that money. If there's conditions, well, revenue cannot be recognized unless until those conditions are met. And we talked about non-exchange transaction, the government involved in four types of non-exchange transaction. Derived tax revenue, imposed non-exchange, government mandated non-exchange and voluntary non-exchange. Now most probably I'm gonna cover those three. In this session, I'm gonna cover this type of exchange in the next session because I believe this type of exchange is worth one whole session. So I'm gonna cover those three in this session. So let's start with derived tax revenue. Those are self assessed, it means they're assessed on whoever's paying them and not of equal value. In other words, of course, they're non-exchange transactions. Okay, so how are these taxes, how are these tax revenue generated? They are derived from assessment on exchange transaction carried on by taxpayer. What do we mean by this? Let's assume you own a store and you sell stuff, you sell goods. Then guess what? When you sell the goods, you're gonna charge, you're gonna multiply the goods by a sales tax. Okay, so if you have a commercial store, what's gonna happen you sell the goods that you're gonna be collecting sales tax. So what happened? Sales tax is a sort of derived tax revenue, it's derived from sales because there was an exchange between the merchant and a customer. Another type of derived tax revenue is income tax. For example, in Pennsylvania, if you work, you have to pay 3.07% for every dollar you earn in the state of Pennsylvania. Also, if you work in the city of Philadelphia, you have to pay an income tax for the city of Philadelphia. And I believe it's closer, it's a little bit less than four, I don't know the exact number, but a little bit less than 4%, less than 4%. There's also gas tax and other taxes on earning and assets. Those are derived tax revenues. So the state or the city, as you earn the revenue, you have to pay taxes. As you make more sales as a merchant, you have to collect sales taxes and give them taxes. So they derive from other transactions. So when they recognize the revenue, revenues recognize when the underlying transaction takes place. So in theory, once the transaction takes place, the government can recognize the revenue because now they are entitled to the taxes, okay? Because remember, every time you recognize revenue, you have to debit, you have to credit revenue, and you have to debit an asset. And that asset could be receivable or it could be slash cash, okay? If you're paying cash. Also, the asset, which is receivable or cash is recognized also in the period of the underlying transaction or when the resources receive whichever comes first. So if they send you the cash, obviously the resources received, you debit cash. But if they don't send you the cash yet, but you know the transaction took place, then you can debit the counter receivable, okay? So sales taxes should be recognized in the period of the underlying sales. So when does the government record sales tax revenues? When the sales takes place in the period in which the sales takes place because now they're entitled to it. So let's take a look at this example. In December, 2017, merchants collect 40 million in city sales tax. So they collected 40 million. Good. They collected 40 million. Of these taxes, 24 million are collected prior to December 15th and must be remitted by February 15th of 2018. And the remaining 16 million must be remitted by March 15th on 2018. Assume 60 days availability. So here's what happened. We have the merchants, the business in the city and those businesses in December, they collected 40 million dollars. So let's take a look at, it's good to take a look at the timeframe here. So this is January 1st, December 31st. So in December, they collected 40 million dollars. So this is, let's assume this is December. I know this is not properly scaled, but just to make the point, this is December. So in December, they collected 40 million. The merchant collected 40 million. Of this 24 million are collected prior to December 15th. So they collected prior to December 15th. This is 12, 15. They collected 24 million. And after December 15, they collected 16 million. So they collected in total 40 million in the month of December. Now, the 24 million, 24 million, they have to be submitted to the government. Let's choose a different color. The 24 million, so this is, we're gonna say this is January and this is February. So they have to be submitted to the government. So it's a little bit different. This is January and this is February and this is March. Okay, March. All right. So the 24 million, this amount here, it has to be submitted before February 15th. So February 15th is sometime here. So this 24 million have to be submitted here. Okay, this is 250. Why is this date important? This date important, this date important, hold on a second, let's look one more time. So this is January and this is February and this is March. Okay, so this is the beginning, December 31st. This is January and this is February. Okay, so the first 24 million, it has to be submitted by mid-February. Why is this important? Because mid-February, if you remember, that's 60 days, this is the 60 day period. This is 60 days after year end. So 60 days, so this is December 31st. So this is 60 days after year end. So any money collected here will be considered revenue for this year. Because remember, any money collected 60 days after year end is considered revenue for that year. Then the remainder, this 16 million will be collected March 15th. So March 15th, it's gonna be, it's gonna go across the 60 day period. Therefore it's not revenue for, it's not revenue, cannot be considered revenue for 2017. So what would the government record? Now we're gonna be assuming here that the government is aware of that 40 million. So the government knew, maybe the merchant filed their paperwork with the government and they knew they collected 40 million. Therefore the government would debit, sales tax is receivable of 40 million because it was generated in 2017. They will credit revenue only for 24 million. So this is the revenue that they're gonna, they're gonna be recording wide because that's the money that's collected 60 days. This is 60 days after year end. Then what the remainder 16 million that the merchant will be send into the government by March 15th, it's considered the third tax revenue, the third tax revenue. The third tax revenue means in a sense they're waiting for it. It's not revenue yet. It basically it's, you remember the third tax revenue is unearned tax revenue. So they cannot consider it revenue, okay? So this, they cannot consider it revenue for this year. So this is the entry that we make. Let's assume it's a regular business, in the regular business, you debit sales, tax is receivable, you credit sales revenue for the whole amount if that's a regular business. Okay, so this is how this example work. Now let's assume, let's change the example a little bit and assume a slight variation of the previous example. Let's assume in November and December, merchant did collect 40 million in sales tax. Of these 10 million is remitted to the state as due by December 15th, 2017. And the remaining 30 million is due on January 15th. The state remit the taxes to the city 30 days after it received. Now we're gonna be using slightly different example. Basically all we're saying here that assume the merchant collected 40 million, 10 million is remitted to the state by December 15th. Now we have the state first, then the state is gonna give money to the city, okay? Because what happened is this? Because the state collect sales tax, most states collect, not all most state collect sales tax. For example, the state of Delaware does not have sales tax. I live close to the state of Delaware so they don't have sales tax. Because the state collect sales tax, what happened, the city will have an agreement with the state and they will tell the state, why don't you collect the taxes for us, then send us the money because you're already collecting your state taxes, so collect the additional money for us. So this is what's happening here. 10 million is remitted to the state. So the state received the first 10 million on December 15th, okay? So the state received the money here, 12, 15, 10 million. And they're gonna be receiving the 30 million, January 15th, 150. And they're gonna be submitting this money 30 days after they receive them. So anyway, any way you look at it, 30 days, you're still gonna be 60 days before year end because this is 60 days. So they're gonna be given the money, they're gonna be given the 40 million, the 40 million, they're gonna be giving the 40 million back to the state within 60 days because it's 30 days after they collect them. So when they collected 115 by 215, they send them on it. So here it doesn't matter, as long as the state is receiving them, the city can recognize the revenue. So they can debit sales taxes receivable 40 million and they can credit sales tax revenue 40 million. Here, remember, the whole 40 million will be received 60 days after year end and this is year end 1231, 1231, okay? What happened if the state wait 90 days to submit the funds? Well, if the state wait 90 days to submit the fund then you credit, what do you credit? The third tax revenue, the third tax revenue. This is another example of derived tax revenue, okay? Another example is income taxes, income taxes. So when the city or the state collect income taxes. So let's take a look at this example to see how this work. The state is on June physical year end. However, income taxes are based on taxpayer income during the calendar year, December 31st. Employers are required to withhold taxes from employee and remit the withheld taxes monthly in individual with significant non-salaries. We'll have to make quarterly payment, okay? So we're looking at 2016, 2017. Yes, 2016, 2017. So let's take a look at this on a timeline. It'll be easier to see what's going on here. So this is 2016, so this is 2016 and this is 2017, okay? This is January 1st, this is 11, this is 1231 and this is 1231, okay? Now, this state government, they have a physical year. Their physical year is, their physical year is June 30th. So their physical year ends here, June 30th. So they start from July 1st till June 30th. So this is their physical year. Remember, employees, they have a calendar year. So when you pay your taxes, you don't pay your taxes on the fiscal year, you pay your taxes from January to December. That's how it works, okay? And remember also that employees, you have to file your taxes, generally speaking, April 15th. So here on 415, you file your taxes, you file taxes. You file your paperwork. You pay your taxes throughout the time but you file your paperwork to find out if you owe more money or if they're gonna give you back some money, you pay too much, so on and so forth, okay? And it's physical year, June 30th. The state collects 95 million in income taxes for the calendar years, 2016 and 2017. So by June 30th, by this date, they collected 95 million in taxes. It refunds 15 billion of taxes based on the return file on April 15th. Remember when the individual filed the return, they may overpaid, they overpaid by 15 million. So we're gonna subtract 15 million. As a result of audits of prior year returns, the state builds taxpayer 10 million for earlier calendar year and it collects seven. So again, they did some additional audit and they build the client, the taxpayer, different taxpayers up to 10 million. Of that, they collected seven. So they collected another seven million before the end of the fiscal year and expect to eventually collect the entire three million. Then the remainder three million is basically collectible. So here's what happened. Here's the cash that they received. They collected 95, they refunded 15, they're down to 80, then they collected seven from different audits. So the cash collected is 87 and they still have receivable of three. So they're gonna debit cash 87 million, credit income tax revenue 87 million because that's the money that they receive and it's spendable, it's measurable, so we can recognize it. Now for the three million, they're gonna debit three million in receivable. Well, you can say taxes receivable, income tax receivable but some sort of a receivable and they're gonna credit the third revenue. Why the third revenue? Because they don't know if they're gonna be receiving this money 30, 60 days after year end or it may take them longer. It seems they're assuming it's gonna take them longer to receive that three million. Therefore they credit the third revenue. They cannot credit the regular revenue income tax revenue because they don't think they're gonna be collecting this money 60 days after year end because it's only revenue. Remember, it's only revenue if it's available, if it's available and availability is defined, you can collect it 60 days after year end. It seems they cannot do this. Now what about the government-wide financial statement? When you prepare the government-wide financial statement actually your revenue will be 90 million because remember government-wide financial statement and government-wide financial statement you have long-term receivable. So not necessarily long-term receivable but any receivable you can recognize it receivable and revenue and this is basically a receivable. The only reason we called it the third revenue because we're not gonna be collecting the money within 60 days and remember we're using modified accrual accounting and modified accrual accounting you have to collect the money within 60 days otherwise it's not revenue, it's the third revenue. Another type of non-exchange we have government-mandated non-exchange and voluntary non-exchange transaction. So basically this is mandated, government-mandated and voluntary, voluntary means it's voluntary. Let's look at them. These occur when one government at one level for example the federal or the state government provide resources to another government like a local government or a school district. So the government is providing money to the school district and guess what? It's not only they're providing money they are putting conditions on that money, okay? Required recipient to accept and use so it's required, you are required to accept and use them for a specific purpose. And once we say specific purpose here this is you remember I thought the eligibility requirement then that money is not really revenue you cannot consider it revenue unless you meet not only the timing requirement because the time requirement applies to all non-exchange transaction you also have to meet the eligibility requirement, okay? So revenue is recognized when all eligibility requirement has been met including time. So eligibility requirement has to be met obviously you have to meet the time requirement and when do we recognize the asset that's easy when the all eligibility requirement has been met or when the resource receive comes first if the resource received comes first then you would recognize it first. So if they send you the money you're gonna have to debit cash but if you cannot credit revenue so if you cannot credit revenue you credit the third revenue, okay? But cash if they send it to you early then it is cash it's an asset. Now if they don't send it to you early but you meet the requirement both time and eligibility then you would have a receivable. So if you meet those then you debit receivable credit revenue assuming you're meeting both, okay? Let's look at voluntary non-exchange. The difference is these are legislative or contractual agreement entered into willingly by two or more parties. Now it's not mandated it's only they include certain type of grant given by one government to another in contribution from individuals like gift to public universities gift from wealthy individuals to maintain the parks or to take care of the stadium whatever the reason is just individual to give money to the government, okay? Similar to government mandated non-exchange transaction but the recipient is not required to accept the words. The government can accept it or cannot accept it but if they accept it and there's conditions they have to meet those conditions. The reason we call them voluntary because they're voluntary the government doesn't have to accept them if they don't want to. The revenue and the asset rules are the same revenue is recognized when all eligibility requirement has been met of course time requirement and asset is recognized when all eligibility requirement has been met or when the resource received if the resource received first then we recognize that resource first. Let's work couple examples few examples to look at this. October, 2017, school district is notified that the state granted granted at 15 million to enhance its technological capabilities. So that's what they did. The funds transmitted by the state December must be used to acquire computers and maybe spent any time. So here what we have is we have kind of a purpose restriction. So what they're saying is you can only use this money for technological capabilities. So you can buy computers with it you could enhance maybe your servers your website, so on and so forth. But we're good to go. You can debit cash, you receive the money and you can credit revenues because there's no time requirement and the assumption is you're gonna be using that money to for technology. And in this situation you may put the money in a special revenue. Okay, so they did not say when do you spend it? Just make sure you spend it on technology then it is revenue. You don't have to wait to spend it on technology. It's revenue because the assumption is they're gonna have enough conditions and monitoring that you spend it on technology. Okay, so this is a purpose kind of a purpose restriction. It's a grant. On October, 2017, a school district is notified that the state awarded it 15 million in assistance. The fund transmitted in December. So we received the fund. So we're gonna debit cash obviously maybe used to supplement teacher salaries acquire equipment and support educational management program. The funds can be used only in the year in the year ending December, 2018. So notice here, the condition is we gave you the money but you cannot spend it in 2017. We gave it to you in December, 2017. So in December, you debit cash but you cannot credit revenue. Why? Because you cannot spend this money until 2018. So it's not revenue because there is a time restriction on it. You did not need the time eligibility. Therefore what you do is you debit the third revenue which basically a state grant for 15 million. Now in 2018, when you actually spend this money funding the teachers, buying more equipment so on and so forth, you debit the third revenue you reduce the liability and it becomes revenue. And hopefully this time requirement and eligibility requirement is making sense. Understricted grant with contingencies. Let's assume in 2017, a private foundation agreed to match all private cash contribution up to 20 million received by a state own museum. And it's 2017, 2018 fund drive. So private foundations told the state owned museum. We're gonna match the contribution that you're gonna get up to 20 million. So you get a dollar, we'll give you a dollar up to 20 million. In 2017, the museum received 14 million in private cash donation. So what did the museum did? The museum debit cash 14 million credited contribution revenue 14 million. Well, what else can they do? Well, since it's 2017, what else can they do? Guess what? Since they already raised 14 million, now they are entitled to another 14 million from that private foundation. Therefore they can debit grant receivable 14 million and they can credit another revenue account 14 million. So the total revenue is 28 million, 14 million received by contributors and 14 million is matched by the private foundation contribution. So notice the museum is eligible, okay? Because the money was actually received. So it can recognize an additional 14 million in revenues. Example, a builder donates two parcels of land to a city. Each has a fair value of, okay, let's take a look at this interesting example. A builder donates two parcels of land to a city. Each has a fair value of four million. The city intent to donate, the city intent to use one park, one for a park and the sell the other land. So a builder donate two pieces of land, one for a park and one is worth four million, that piece of land. And the other one is it's worth four million, but it's for sale. So the question is, how would the government account for this donation? Well, let's look at the park. How would they account for the piece they're gonna be putting the park on it? Well, what would they do with this first piece? Well, and the answer is nothing. Why not? Well, remember what we said at the beginning of this session, we said in governmental funds, we don't have land, we don't have building, we don't have equipment. We don't account for long-term assets. Therefore, what's gonna happen is, we just add this land on an Excel sheet somewhere for our record. So nothing, we don't do anything with this. The question is, what do we do with this piece of land that's for sale? Well, what's gonna happen is this. This is the year-end and this is, I'm gonna use a different color and this is 60 days after year-end, okay? If the land is sold after the year-end, but 60 days before the period, which is the availability period, so in 60 days, then what we do is we debit land, help for sale for the financial statement and we credit contribution revenue, or revenue from contribution, revenue from contribution, 4 million and 4 million, assuming the land is sold 60 days after year-end, okay? What happened if the land is sold after 60 days? So we sold the land 60 days after the year-end. Well, if it's sold 60 days after year-end, we're gonna debit for the financial statement. Assuming the financial statement hasn't been issued yet, land held for sale, 4 million, the third revenue, 4 million, why? Because we sold it 60 days after, therefore as far as December 31st, that's not revenue, that's the third revenue. That's the third revenue because it was sold 60 days after. Then let's even work a third scenario. What happened if we did not sell this land? Not here, not here, not here. So we did not sell it in the foreseeable future, let's assume we did not sell it in the following year. What do we have to do then? What can we do? And the answer is nothing. But let's clarify something. When I said land held for sale here, this is land, you're saying you just told me I cannot record land. Well, this is land held for sale. Land held for sale is an investment account. It's an investment account. It's not property, plant, and equipment. It's an investment account. Are we allowed to carry short-term investments? Sure, short-term investments, marketable security, short-term investments are allowed to be carried. But if we did not sell this land within the next year, if we could not find a buyer, just simply put it on sale, we cannot sell it. Then guess what? We don't do anything because then this becomes long-term investment. Now we have this piece of land. It's an investment for us, but it's a long-term investment. It's sitting on our books for more than a year. Therefore, we cannot record it because we cannot have long-term assets. We're gonna keep track of it on the side on an Excel sheet, okay? It's interesting, but that's how it is. The next session we're gonna look at is imposed non-exchange transaction. And we're gonna be focusing in that session, not only thing, but we're gonna be focusing on property taxes. And I believe property taxes they do, they should have their own lecture. Therefore, I'm gonna have a separate lecture for imposed non-exchange revenues. But it's important to understand how non-exchange revenues work in general. So when I start the next session, I'm gonna say go back to the prior session because we look at the non-exchange.