Classification: Is the school district's participation in the National School Lunch grant program an exchange transaction or a nonexchange transaction? What is the basis for your answer? Please see below.

The example involves a public school cafeteria serving lunch. Some students pay full price for their food, but others receive lunch for a reduced price or for free under the federal National School Lunch Program. Let's assume the school cafeteria meets all nutritional requirements to qualify for National School Lunch Program - all it needs to do now is serve the lunches. The grant is expenditure driven - when the school district proves the reduced price and free meals have been provided, the federal government owes it a grant payment. Ignore the part of the program that involves school districts receiving free food products from the USDA to use in the meals.