NPOs recognized services and products contributed/donated to the organization, as revenues. For example, a carpenter wanted to donate his service for repair and maintenance or a licensed CPA who performed an audit to an organization is considered as income or revenue, even though there wasn't any actual transfer of funds. The service of a carpenter or the CPA will be recorded as revenues (CR) and the repair/maintenance and audit work (DR) will be recorded accordingly. The reasoning behind this is, the services are the type of services that required expertise from a carpenter or CPA, not just as a volunteer with no related training as to the services provided, which can be disallowed in this case.
Meanwhile, I read it somewhere that “FASB’s new revenue recognition standard will become effective for most not-for-profit (NFP) entities in 2019”. To accomplish this objective, reporting entities are to apply a five-step approach:
– Identify the contract with the customer.
– Identify the performance obligations in the contract.
– Determine the transaction price.
– Allocate the transaction price to the performance obligations in the contract.
– Recognize revenue when (or as) the entity satisfies a performance obligation.
(Turpen, R., CPA Journal – April 2017: cpajournal.com/2017/05/01/not-profit-entities-new-revenue-recognition-standard)
I find this article interesting since it has NPOs JE and F/S (Statement of Activities) illustrations, specifically as to ‘revenue recognition'; it has great explanations as well. Check it out.
AUD - 49
BEC -
NINJA in Training
FAR - NINJA in Training
REG - 55
Passed: AUD (75%'08/77%'17), REG (76%'09) & BLaw(77%'99); highest on FAR (63%'11/'15) & BEC (63%'11). Credit Hours: USA(PH)-BCom'85(4yr-grandfathered); UBC-(DAP'02/'19); DC-(BBA-Acctg.'22-4th yr)=over 150 hrs credits