If a capital grant funds a capital asset, how is it reflected in government-wide statements?

• A. Grant revenue is recognized when cash is received.
• B. Grant revenue is recognized when earned and available; if the grant funds capital assets, the asset is recorded and depreciation is recognized over its life.
• C. Grant revenue is recognized only as deferred revenue until the asset is disposed.
• D. Grant funds are recognized as a liability until the asset is disposed.

Answer: (B)