Case Studies in Not-for-Profit Accounting and Auditing

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.     ...