FASB Issues Accounting Standards Update for Not-for-Profit Entities on Contributed Nonfinancial Assets

On September 17, 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-07 related to Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets.  Entities that receive contributed nonfinancial assets would be impacted by this standard.  Nonfinancial assets include fixed assets (such as land, buildings and equipment), use of fixed assets or utilities, materials and supplies, intangible assets, services and unconditional promises of those assets.

This standard will improve financial reporting by providing new presentation and disclosure requirements on contributed nonfinancial assets.  Entities will be required to create a separate line item on the statement of activities to include contributed nonfinancial items, separated from contributions of cash and other financial assets.  The following items will be required to be disclosed in the footnotes:

  • Disaggregation of the amount of contributed nonfinancial assets recognized within the statement of activities by category that depicts the type of contributed nonfinancial assets, and
  • For each category of contributed nonfinancial assets recognized, the following need to be included:
    • Qualitative information about whether the contributed nonfinancial assets were either monetized or utilized during the reporting period.  If utilized, the entity will disclose a description of the programs or other activities in which those assets were used;
    • The entity’s policy about monetizing rather than utilizing contributed nonfinancial assets;
    • A description of any donor-imposed restrictions associated with the contributed nonfinancial assets;
    • A description of the valuation techniques and inputs used to arrive at a fair value measurement; and
    • The principal market used to arrive at a fair value measure if it is a market in which the recipient entity is prohibited by a donor-imposed restriction from selling or using the contributed nonfinancial assets.

Entities will be required to adopt this ASU on a retrospective basis, and it is effective for annual periods beginning after June 15, 2021.  This would include calendar years ending December 31, 2022 and fiscal year ending June 30, 2023.  Early adoption is permitted.

At a Not-for-Profit Advisory Committee Meeting also held in September, committee members provided feedback to FASB staff on how to educate not-for-profit stakeholders on the new ASU.  Committee members suggested speaking at conferences or holding a virtual roundtable for some larger entities to ease implementation and answer questions that may arise.  

Schneider Downs will also be following any implementation guidance and would be happy to answer any questions on the new standard.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2023 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Gainful Employment Disclosures in Higher Education
Protect Your Students, Faculty and Staff: 3 Common Cyber Attack Methods to Watch Out for in 2023
Key Takeaways from the 2023 CUPA-HR Higher Education Employee Retention Survey
The Latest on the NCAA's National NIL Proposal
Single Audit Reporting Reminders
Understanding Coronavirus State and Local Fiscal Recovery Funds Audit and Reporting Requirements
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×