Last September, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-07 regarding the disclosure and presentation of contributed nonfinancial assets. The update seeks to increase transparency about how these types of assets are measured as well as how many of them are used in the nonprofit organization’s programs and other activities.

Nonfinancial assets include gifts, donations, gifts-in-kind, and donated services. They also include fixed assets such as land, buildings, and equipment, or use of such fixed assets, materials and supplies, intangible assets, and services.

To increase reporting transparency, the ASU requires contributed nonfinancial assets to be presented as a separate line item apart from contributions of cash and other financial assets in the statement of financial position.

Reports must further break down and disaggregate the amounts of these contributions by category. For each category, the organization must further disclose:

• Qualitative information about whether the contribution was monetized or utilized during the reporting period. If utilized, the ASU also requires a description of the programs that used the contribution.
• The organization’s policy (if you have one) about monetizing versus utilizing contributed nonfinancial assets.
• A description of any donor-imposed restrictions on the assets.
• A description of the valuation techniques and inputs used to arrive at a fair value measure at initial recognition.
• The principal or most advantageous market used in the valuation if it is a market in which there is a donor-imposed restriction on the sale or use of the contribution.

To comply with the ASU, your organization must have a tracking process in place to meet these new disclosure requirements. The new requirements apply retrospectively and take effect for annual reporting periods beginning after June 15, 2021 and for interim reporting periods beginning after June 15, 2022.

If you have questions about how to report contributed nonfinancial assets for your organization, contact a Hantzmon Wiebel team member today.

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Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.




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