FASB Statement 116 states that contributions, including unconditional promises to give, are to be recorded as revenues when the promise is made. Conditional promises to give are not recognized until the conditions are met. If a condition is not met, the donor is not bound by the promise. However, conditions are different than restrictions. Conditions require some action to be completed while restrictions require the contribution be used for a specific purpose.
All contributions are to be recorded at fair market value at the date of receipt. Pledges or promises to contribute in the future are recorded as receivables. The contribution revenue is recorded at the time of the pledge, net of an allowance of estimated uncollectibles. As time passes, the present value of the receivable will increase. At the end of each accounting period the difference between the previously recorded revenue and the new present value is recorded as additional contribution revenue, not interest.
FASB Statement 116 states that contributions, including unconditional promises to give, are to be recorded as revenues when the promise is made. Conditional promises to give are not recognized until the conditions are met. If a condition is not met, the donor is not bound by the promise. However, conditions are different than restrictions. Conditions require some action to be completed while restrictions require the contribution be used for a specific purpose.
ReplyDeleteAll contributions are to be recorded at fair market value at the date of receipt. Pledges or promises to contribute in the future are recorded as receivables. The contribution revenue is recorded at the time of the pledge, net of an allowance of estimated uncollectibles. As time passes, the present value of the receivable will increase. At the end of each accounting period the difference between the previously recorded revenue and the new present value is recorded as additional contribution revenue, not interest.