Statement of Financial Accounting Standards No. 116 - FASB

Statement of Financial Accounting Standards No. 116 FAS116 Status Page FAS116 Summary Accounting for Contributions Received and Contributions Made June 1993 Financial Accounting Standards Board of the Financial Accounting Foundation 401 MERRITT 7, P.O. BOX 5116, NORWALK, CONNECTICUT 06856-5116 Copyright © 1993 by Financial Accounting Standards Board. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Financial Accounting Standards Board. Page 2 Statement of Financial Accounting Standards No. 116 Accounting for Contributions Received and Contributions Made June 1993 CONTENTS Paragraph Numbers Introduction ....................................................................................................................1–2 Standards of Financial Accounting and Reporting: Scope ......................................................................................................................3–4

Definitions...................................................................................................................5–7 Contributions Received.............................................................................................8–16 Contributed Services.............................................................................................9–10 Contributed Collection Items..............................................................................11–13 Reporting by Not-for-Profit Organizations.........................................................14–16 Expiration of Donor-imposed Restrictions..................................................................17 Contributions Made .....................................................................................................18 Measurement at Fair Value....................................................................................19–21 Conditional Promises to Give................................................................................22–23 Disclosures of Promises to Give............................................................................24–25 Financial Statement Presentation and Disclosure for Collections.........................26–27 Effective Date and Transition................................................................................28–30 Appendix A: Background Information.......................................................................31–42 Appendix B: Basis for Conclusions .........................................................................43–172 Appendix C: Examples of the Application of This Statement to Specific Situations............................................................................................173–208 Appendix D: Glossary 209 Page 3 Copyright © 1993, Financial Accounting Standards Board Not for redistribution FAS 116: Accounting for Contributions Received and Contributions Made FAS 116 Summary This Statement establishes accounting standards for contributions and applies to all entities that receive or make contributions. Generally, contributions received, including unconditional promises to give, are recognized as revenues in the period received at their fair values. Contributions made, including unconditional promises to give, are recognized as expenses in the period made at their fair values. Conditional promises to give, whether received or made, are recognized when they become unconditional, that is, when the conditions are substantially met. This Statement requires not-for-profit organizations to distinguish between contributions received that increase permanently restricted net assets, temporarily restricted net assets, and unrestricted net assets. It also requires recognition of the expiration of donor-imposed restrictions in the period in which the restrictions expire. This Statement allows certain exceptions for contributions of services and works of art, historical treasures, and similar assets. Contributions of services are recognized only if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Contributions of works of art, historical treasures, and similar assets need not be recognized as revenues and capitalized if the donated items are added to collections held for public exhibition, education, or research in furtherance of public service rather than financial gain. This Statement requires certain disclosures for collection items not capitalized and for receipts of contributed services and promises to give. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 1994, except for not-for-profit organizations with less than $5 million in total assets and less than $1 million in annual expenses. For those organizations, the Statement is effective for fiscal years beginning after December 15, 1995. Earlier application is encouraged. This Statement may be applied either retroactively or by recognizing the cumulative...

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