Not-for-Profit Financial Reporting

Appendix AExcerpt of Appendix A of Chapter 5 of Aicpa Audit and Accounting Guide Not-for-Profit Entities¹

Appendix A—Excerpt From AICPA Financial Reporting White Paper Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities.²

A-1 Not-for-profit entities face various challenges in applying the provisions of Financial Accounting Standards Board Accounting Standards Codification 820, Fair Value Measurement, in part because markets do not exist for certain assets and liabilities. To assist practitioners, on October 14, 2011, the AICPA issued the white paper Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities. The following excerpt provides assistance for measuring unconditional promises to give cash or other financial assets due in one year or more.

• Unconditional Promises to Give Cash
• 1. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 958-605,³ in discussing measurement principles for contributions, generally requires not-for-profit entities (NFPs) to measure at fair value recognized contributions of cash or other assets (for example, marketable securities, land, buildings, use of facilities or utilities, materials and supplies, other goods or services) and unconditional promises to give those items in the future.
• 2. The discussion of fair value measurements in FASB ASC 820-10-35 includes an exit price approach (that is, the price that would be received for a promise to give [asset] in an exchange ...