Wiley Not-for-Profit GAAP 2019

15COLLECTIONS

• Perspective and Issues
• Concepts, Rules, and Examples
  • All Collection Items Are Capitalized
  • Collection Items Not Capitalized
  • Collections Capitalized after SFAS Was Adopted
• Disclosure Requirements

PERSPECTIVE AND ISSUES

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. 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.

In 2019, FASB issued ASU 2019-03, which allows proceeds from sale of collection items to also be used for direct care of existing collections. FASB did not define what constitutes ‘direct care’, but left it to each organization to define this ...