On June 21, 2018 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions received and Contributions Made, which provides accounting guidance around contributions of cash and other assets received and made by not-for-profit organizations and business enterprises.
Topics: Not-for-Profits, NFP, Holly Perez, FASB, Financial Accounting Standards Board, Revenue recognition, ASC Topic 606
The Financial Accounting Standards Board (FASB) recently issued a proposed accounting standards update, Not-for-Profit Entities (Topic 958) Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. This proposed update is designed to clarify revenue recognition related to grants and contracts and contributions. Released in early August, the proposed changes would help not-for-profits evaluate whether grants and contracts meet the definition of nonreciprocal transactions, or contributions. If transactions meet this definition, they would be excluded from ASU 2014-09 Revenue from Contracts with Customers, referred to as the new revenue recognition standard, and therefore require following of the contribution guidance. Alternatively, if a transaction meets the definition of a reciprocal transaction, or an exchange transaction similar to a contract with a customer, then the new revenue recognition standard would apply.
Topics: not-for-profit, NFP, Michelle Spriggs, Revenue recognition, Revenue Recognition Standard, revenue recognition for nonprofits, nonprofit
All entities that have contracts with customers will be affected by the new revenue recognition standard, including not-for-profit organizations.
The Financial Accounting Standards Board (FASB)’s Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) creates a five-step revenue recognition model that replaces a rules-based approach with a principles-based approach. The changes are wide-ranging and will have more of an impact on commercial entities than the nonprofit sector, and not-for-profit organizations will have some exceptions to following the new standard. Contributions, for example, are scoped out of the changes. Nevertheless, other provisions of the new guidance could be of interest and should be considered carefully.
Topics: not-for-profit, NFP, nonprofit, Revenue recognition, Revenue Recognition Standard, Government Grants