[Anonymous]

Dear all, please help with a question about fair value treatment in non-profit accounting.

If someone donates an artwork to a museum （FV 1million), after one year, the FV decreased to 0.9million.

Per my understanding, when the donation is made, the museum should record the asset in fair value：

Debit: Asset 1million

Credit: Contribution-support 1million

Does the museum do anything to recognize the fair value decrease? I remember per Becker review, donations should be recorded at fair value, however, there is no specific clauses on how to deal with the fair value change.

[ymmit]

My understanding depends on what the intent of obtaining the artwork is. If the artwork is obtained for the sole purpose of appreciating in value and making money on the sale, you treat the artwork in the same manner as common stock since it is essentially the same thing. If the artwork is obtained solely for artistic display and preservation with no intent to sell, no adjustments are made to reflect fair value increases/decreases.

Licensed CPA!

[BEC Savvy]

How are works of arts initially recognized? can someone provide the relevant codification reference?

[AndreA]

Initially at FV and after at FV. I'm not 100% sure, but I remember I had the same problem. By the way If someone donates an artwork to a museum it should be capitalized or expensed and you need to know when to capitalize and when you can expense.

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[BEC Savvy]

What is the citation for this conclusion? I feel a bit lost in the NPOs citations. Thanks so much!

[Author]

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