A charitable organization decides to construct a building on its property. All necessary construction items were paid for by the charitable organization at a cost of $300,000. A local construction company contributes labor and equipment. The charitable organization had the completed building appraised for insurance purposes. The appraisable estimated the fair value of the building at $600,000.

Based on the above information, discuss the following:

1. Would the charitable organization recognize the contributed labor and equipment from the construction company in the financial statements? Explain why or why not?

2. Prepare the journal entry that would recognize the contributed labor and equipment if the charitable organization recognizes it in the financial statements.