Perspective and Issues

Concepts, Rules, and Examples

All Collection Items Are Capitalized

Collection Items Not Capitalized

Collections Capitalized After SFAS 116 Was Adopted

Disclosure Requirements


One area of financial accounting that is somewhat unique to not-for-profit organizations is the accounting for collections. Accounting for collections was an area that was extensively deliberated by the FASB prior to the issuance of its accounting guidance for collections in SFAS 116. These deliberations and the divergent viewpoints of the interested parties have resulted in accounting guidance for collections that allows several options. Once an option is adopted, however, it becomes the not-for-profit organization's accounting policy for collections and must be followed consistently.

Collections are works of art, historical treasures, and similar assets that are defined in the FASB ASC Master Glossary:

  • Held for public exhibition, education, or research in furtherance of public service rather than financial gain;
  • Protected, kept unencumbered, cared for, and preserved;
  • Subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections.

Not-for-profit organizations may establish a policy to either capitalize all collections, capitalize only collection items after adopting SFAS 116, or not capitalize collections. Organizations cannot elect to capitalize only selected collections ...

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