Not-for-Profit Accounting

Statements (not-for-profit (NFP), Accounting Standards Codification (ASC) 958)

Financial position · Activities · Cash flows · Expenses by nature and function (all NFPs) · Liquidity disclosure.

Net assets

• Two classes: without and with donor restrictions.
• Board-designated = without donor restrictions.
• All expenses → without donor restrictions; releases are reclassifications.

Contributions

• Conditional = barrier + right of return → not recognized until the barrier is met.
• Unconditional pledges → revenue now; > 1 year at present value; discount accretes as contribution revenue.
• Multi-year pledge → implied time restriction.
• Exchange transactions (tuition) → revenue under ASC 606.

Contributed services

Recognize only if they create or enhance a nonfinancial asset, or need specialized skills and would otherwise be purchased.

Other

• Collections: need not be capitalized if exhibited, preserved, and proceeds reinvested in collections.
• Investments at fair value; gains in the statement of activities.
• Agency transfer without variance power → liability.

Exam traps

• A restriction met in the same period the gift is received may be reported as without donor restrictions, if that policy is applied consistently.
• Investment return is reported net of external and direct internal investment expenses.
• Fundraising costs are expenses — they aren't deducted from contribution revenue.