In late September, the Financial Accounting Standards Board (FASB) published Accounting Standards Update (ASU 2020-07), Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. The purpose of the new standard is to provide clear guidance on how nonprofits are to report donated nonfinancial contributions, non-cash contributions, on the financial statement. Under the prior standards, there was significant concern about industry reporting inconsistencies which made it difficult to understand both the financial position and efficiency of a nonprofit. It almost made comparative analysis difficult as well. To help clients, prospects, and others, Wilson Lewis has provided a summary of key points below.
ASU 2020-07 does not make any changes to how nonprofits recognize and measure the value of nonfinancial assets, rather it changes how they are reported. It is now required that these assets be listed as a separate line item from financial and cash contributions in the statement of activities. In other words, food, supply, clothing, and service donations will all need to be listed separately. In addition, there are new footnote disclosures that need to be made, including;
Effective Date
The changes highlighted are effective for annual reporting periods beginning after June 15, 2021, and for all interim periods within annual periods beginning after June 15, 2022. Early adoption of the changes is permitted.
Contact Us
The changes outlined in ASU 2020-07 will require Atlanta nonprofits to make several changes to how non-financial contributions are reported. If you have questions about the changes or need assistance with a compliance audit or tax issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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