Chapter 4 PROMISES TO GIVE
LEARNING OBJECTIVES
After completing this chapter, you should be able to do the following:
- Identify key concepts related to promises to give.
- Distinguish between conditional and unconditional promises to give.
- Identify intentions to give.
TECHNICAL BACKGROUND INFORMATION
Promises to Give
In general terms, a promise to give is a written or oral agreement to contribute cash or other assets to another entity. A promise to give may be either conditional or unconditional. The FASB Accounting Standards Codification (ASC) glossary offers a more formal definition:
Promise to Give
A promise to give is a written or oral agreement to contribute cash or other assets to another entity. A promise carries rights and obligations. The recipient of a promise to give has a right to expect that the promised assets will be transferred in the future, and the maker has a social and moral obligation, and generally a legal obligation, to make the promised transfer. A promise to give may be either conditional or unconditional.
When discussing promises to give, a vital distinction is whether the promise to give is unconditional or conditional, as illustrated in the following:
KNOWLEDGE CHECK
1. Which is true of promises to give?
a. When discussing promises to give, a vital distinction is whether the promise to give is unconditional or conditional.
b. ...
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