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Accounting guidance for contributions received and made, primarily by not-for-profits, would change under new rules that FASB recently proposed.
The proposed Accounting Standards Update (ASU) is designed to help organizations decide if a transaction should be accounted for as a contribution or an exchange. The proposal includes clarifying guidance to help organizations evaluate whether a resource provider is receiving value in return for the resources transferred.
FASB undertook the project after receiving feedback that characterizing grants as exchanges or contributions – and distinguishing between conditional and unconditional contributions—has led to difficulty and diversity in practice among not-for-profits.
Read the Journal of Accountancy story here.