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FASB Proposes Improvements to Nonprofit Grant and Contribution Accounting

By MarksNelson on September 18, 2017 in Articles, Assurance Services

In early August, the FASB issued a proposed accounting standard update to clarify and improve accounting guidance for contributions received and made.

The proposed update includes 5 items for consideration when making the distinction of contribution vs. exchange transaction which focus on the main point that in order to be an exchange transaction, the resource provider (donor) must receive commensurate value in return for the resources transferred.

The other main clarifying item in the proposed update is to provide guidance on conditional vs. unconditional contributions.  The guidance specifies that a donor-imposed condition must have both

  1. A barrier (which must be overcome) and
  2. A right of return to the promisor for assets which have already been transferred or a right of release of the promisor from its obligation to transfer assets. So either you get your assets back or you get released from the obligation to deliver assets.

The proposed update provides a flowchart and many examples to assist with implementation of the guidelines if they pass. FASB is asking for comments on the proposed changes through November 1, 2017.

For questions about Nonprofit services contact Amanda Kumma-Reeves at 816-743-7700.

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MarksNelson LLC works with clients to help safeguard and grow their businesses. Our ultimate goal is to help our clients to Move Forward. The firm provides Assurance, Accounting Services and Business Advisory, Business Valuation, Consulting, Cost Segregation, Employee Benefit Plan Audits, Litigation Support, Forensic Accounting, International Tax, State and Local Tax and Tax planning, advisory and compliance services. MarksNelson is a member of The Leading Edge Alliance, the second-largest international professional association of independently owned accounting and consulting firms, serving clients who need additional resources on a national or international level. MarksNelson has significant accounting and business advisory experience in the auto dealership, construction, insurance, manufacturing, distribution and real estate sectors. The firm was named among the 2014 Best Accounting Firms for Leadership Equity by the 2014 Accounting MOVE Project for its dedication to gender equity.