University of Phoenix, Online
ACC/460 – Government and Not-For-Profit Accounting
SFAS 116 and 117 set for requirements which, in turn, have effect on the financial statements.
Statement No. 116 says that not-for-profits should recognize the contributions of collectibles as revenues and capitalize their entire collections, but entities do not need to recognize contributions if the items follow three conditions:
They are held for public exhibition, education, or research used to further financial gain.
They are protected, kept unencumbered, cared for, and preserved.
They are subject to policy that requires proceeds from sales of collection items to be used to acquire other items for collections.
Not-for-profits that decide to not capitalize their collections must disclose the details of items purchased and “deacessed” in the notes to the financial statements. If they do not capitalize their collections they should not be recognized as revenues, but if they do capitalize their collections, they should recognize collection contributions as revenues.
Statement No. 117 of the FASB, Financial Statements of Not-for-Profit Organizations, establishes standards for the form and content of financial statements by providing that not-for-profits must issue three main financial statements: a statement of financial position (balance sheet), a statement of activities, and a statement of cash flows. Further, not-for-profits are required to classify their net assets into one of three categories: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets as determined by whether or not there are donor-imposed restrictions.
Statement No. 117 requires that the statement of financial position contains total assets, total liabilities, total net assets, total unrestricted net assets, total temporarily restricted net assets, and total permanently restricted net assets. The...