In short
In a split-interest agreement, a donor gives assets to a not-for-profit, or a trust, and the benefits are shared between the not-for-profit and other beneficiaries. Examples are charitable remainder trusts, charitable lead trusts and gift annuities.
Key takeaways
- The not-for-profit recognizes contribution revenue for its interest: the fair value of the assets less the present value of the amounts owed to others.
- The revenue usually has donor restrictions, at least as to time.
- The liability to other beneficiaries is remeasured as estimates change.
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 not-for-profit organization classifies net assets into how many categories?