Tucker Hospital, a nonprofit hospital affiliated with Tucker University, received a donation of medical supplies during the year ended December 31, 2005. The supplies cost the vendor $10,000 and had a selling price of $15,000 on the date they were donated. The vendor did not place any restrictions on how the supplies were to be used. During 2005, all of the donated medical supplies were used. On the hospital’s statement of operations for the year ended December 31, 2005, how should the donation be reported?

  1. The donation should be included in both revenue and operating expenses in the amount of $10,000.
  2. The donation should be excluded from the statement of operations.
  3. The donation should be included in both revenue and operating expenses in the amount of $15,000.
  4. The donation should be included in revenue in the amount of $15,000 and in operating expenses in the amount of $10,000.