The Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2020-07
, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets
. This ASU requires a not-for-profit entity to present contributed nonfinancial assets on the statement of activities as a line item that is separate from contributions of cash or other financial assets. The term nonfinancial asset includes fixed assets, use of fixed assets or utilities, materials and supplies, intangible assets, services, and unconditional promises of those assets.
A not-for-profit entity is also required to disclose contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets. For each category of contributed nonfinancial asset recognized, a not-for-profit entity is required to disclose:
- Qualitative information about whether the contributed nonfinancial assets were either monetized or utilized during the reporting period. If utilized, a not-for-profit entity also is required to disclose a description of the programs or other activities in which those assets were used.
- The not-for-profit’s policy, if any, about monetizing rather than utilizing contributed nonfinancial assets.
- A description of any donor restrictions associated with the contributed nonfinancial assets.
- A description of the valuation techniques and inputs used to arrive at a fair value measurement, in accordance with the requirements in Topic 820, Fair Value Measurement, of the FASB’s Accounting Standards Codification, at initial recognition.
- The principal market (or most advantageous market) used to arrive at a fair value measurement if it is a market in which the recipient not-for-profit entity is prohibited by a donor-imposed restriction from selling or using the contributed nonfinancial assets.
This ASU should be applied on a retrospective basis and is effective for annual periods beginning after June 15, 2021, and interim periods within annual periods beginning after June 15, 2022. Early adoption is permitted.