In November 2005, Maple Township received an unexpected state grant of $100,000 to finance the purchase of school buses, and an additional grant of $5,000 was received for bus maintenance and operations. According to the terms of the grant, the State reimbursed Maple Township for $60,000 for the purchase of school buses and an additional $5,000 for bus maintenance during the year ended June 30, 2006. The remaining $40,000 of the capital grant is expected to be spent during the next fiscal year June 30, 2007. Maple’s school bus system is appropriately accounted for in a special revenue fund. In connection with the grants for the purchase of school buses and bus maintenance, what amount should be reported as grant revenues for the year ending June 30, 2006, when using modified accrual accounting?

  1. $ 5,000
  2. $ 60,000
  3. $ 65,000
  4. $100,000