The FASB has recently issued ASU 2020-07, Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. Prior to ASU 2020-07, there were no specific disclosure requirements for contributed nonfinancial assets other than for contributed services. The FASB believes this ASU addresses stakeholders’ concerns regarding the lack of transparency by enhancing the presentation and disclosure requirements for contributed nonfinancial assets.

Specifically, ASU 2020-07 requires that contributed nonfinancial assets be separately presented on the statement of activities and that the footnotes include a disaggregation of contributed nonfinancial assets by type. Additionally, for every type of contributed nonfinancial assets, a not-for-profit entity will be required to disclose a variety of qualitative information including:

a)    whether the contributed nonfinancial assets were either monetized or utilized during the reporting period

b)    the not-for-profit entity’s policy, if any, about monetizing rather than utilizing contributed nonfinancial assets

c)    if there are any donor-imposed restrictions associated with the contributed nonfinancial assets

d)    a description of the valuation techniques used to arrive at the fair value of the contributed nonfinancial assets

e)    the principal market used to arrive at a fair value measure if it is a market in which the not-for-profit entity is prohibited by a donor-imposed restriction from selling

ASU 2020-07 will only affect presentation and disclosure and does not change the guidance on when to recognize or how to value contributed nonfinancial assets.

ASU 2020-07 is effective for annual periods beginning after June 15, 2021 and is to be applied retrospectively. Early adoption is permitted.

The full text of the ASU 2020-07 is available here.

^{Readers should not act upon information presented without individual professional consultation.}