Proposed Accounting Standards Update - In-Kind Contribution Reporting
The Financial Accounting Standards Board (FASB) has issued the Proposed Accounting Standards Update Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets (Exposure Draft), which would impact the presentation and disclosure of contributed nonfinancial assets, also known as gifts-in-kind (in-kind donations), if the proposed changes are finalized.
Gifts-in-kind include donated items and services, such as land, buildings, and equipment; the use of property or equipment; materials and supplies, such as food or clothing; and recognized contributed services. The amendments in the Exposure Draft are intended to increase transparency about the valuation of these items and their use in a not-for-profit’s programs and other activities. Currently, specific disclosure requirements for contributed nonfinancial assets are very limited.
The amendments in the Exposure Draft would require not-for-profit entities to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets. The amendments would also require the following disclosures:
- Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets received
- For each category of contributed nonfinancial assets received:
- Qualitative information about whether the contributed nonfinancial assets were or are intended to be either monetized or utilized during the reporting period and future periods (if utilized, a description of the programs or other activities in which those assets were or are intended to be used)
- A description of any donor restrictions associated with the contributed nonfinancial assets
- The valuation techniques and inputs used to arrive at a fair value measure, including the principal market (or most advantageous market), if significant, in accordance with the requirements in Topic 820, Fair Value Measurement
Not-for-profit entities should consider the amendments, including whether current systems capture the information necessary to comply with the proposed amendments and what additional resources may be necessary. The FASB is accepting comments on the Exposure Draft via its website through April 10, 2020.
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