In short
Works of art, historical treasures and similar items held for public exhibition, education or research, protected and preserved, need not be capitalized, provided proceeds from selling collection items are used to acquire new ones or for their direct care.
Key takeaways
- If not capitalized, purchases reduce net assets and donated items aren't recognized as contributions.
- Organizations that don't capitalize still disclose their collection policies.
- Governments follow similar rules for collections.
Where it's tested
FAR: Not-for-Profit Accounting — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A museum receives a donated painting that it adds to its collection. Under what condition may the museum choose not to recognize the contribution?