FASB Issues New Guidance on In-kind Donations
Under the new ASU, nonfinancial assets are to be presented as a separate line item
The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-07, Presentation and Disclosures by Not-for-Profit (NFP) Entities for Contributed Nonfinancial Assets, in September 2020. This standard has been issued by to increase the transparency of financial reporting related to contributed nonfinancial assets, often referred to as “in-kind donations.” Nonfinancial assets are defined as fixed assets, use of fixed assets or utilities, materials and supplies, intangible assets, services, and unconditional promises of those assets.
Under the new ASU, nonfinancial assets are to be presented as a separate line item on the statement of activities and cannot be combined with cash contributions received. For each category of nonfinancial donations received, footnote disclosures are also required to be made regarding:
- Qualitative information on whether the NFP used (including which program/activity, if applicable) or sold the nonfinancial assets during the reporting period, or if they intend to in future periods
- Any donor restrictions placed on the contributed nonfinancial asset
- The valuation techniques used to measure the nonfinancial asset at fair value, including the principle market used to arrive at that fair value measurement
Please select this link to read the complete blog post from OSAE Member Clark Schaefer Hackett.