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Highlights of ASU 2020-07: Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets (“Gifts-in-Kind”)

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Highlights of ASU 2020-07: Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets (“Gifts-in-Kind”)

 

Beginning after June 15, 2021, amendments, issued by the FASB, will take effect that increase transparency around contributed nonfinancial assets (also known as “gifts-in-kind”) received by not-for-profit organizations, including transparency on how those assets are used and how they are valued.  

Contributed nonfinancial assets include fixed assets such as land, buildings, and equipment, the use of fixed assets or utilities, materials and supplies, such as food, clothing, or pharmaceuticals, intangible assets, services, and unconditional promises of those assets.

Specifically, the amendments require:

(1) that contributed non-financial assets received by a not-for-profit be presented as a separate line item in the statement of activities (i.e., contributions apart from cash and other financial assets received).

(2) that a not-for-profit disclose:

a) A disaggregation of the amount of contributed nonfinancial assets recognized within the statement of activities by category that depicts the type of contributed nonfinancial assets.

b) For each category of contributed non-financial assets recognized (as identified in a)):

(i) qualitative information about whether contributed non-financial assets were either monetized or utilized during the reporting period, and if utilized, a description of the programs or other activities in which those assets were used, (ii) a description of the accounting policy (if any) about monetizing rather than utilizing contributed non-financial assets, (iii) a description of any donor-imposed restrictions associated with the contributed non-financial assets, (iv) a description of the valuation techniques and inputs used to arrive at a fair value measure at initial measurement pursuant to FASB ASC Topic 820,Fair Value Measurement, and (v) identification of the principal market (or most advantageous market) used in arriving at fair value if that market is one in which the not-for-profit is prohibited by a donor-imposed  restriction from selling or using the contributed non-financial asset.

The amended guidance does not alter the recognition and measurement requirements of contributed non-financial assets received in FASB ASC 958-605.

The amendments in this Update should be applied on a retrospective basis and are effective for annual pe­riods beginning after June 15, 2021, and interim periods within annual pe­riods beginning after June 15, 2022.

        

The full text of ASU 2020-07 is available at www.fasb.org

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