The FASB has issued an Exposure Draft that would update the definition of the term, “collection” within the Master Glossary of the Accounting Standards Codification so that it is consistent with the definition used in the American Alliance of Museums Code of Ethics for Museums.
Current GAAP states that an entity need not recognize contributions of works of art, historical treasures, and similar assets if the donated items are added to collections and meet three conditions. One of those conditions states that the entity must be subject to an organizational policy that requires proceeds from sales of collection items to be used to acquire other items for collections. The language contained in the Exposure Draft would modify that condition to allow the proceeds to be used to support the direct care of existing collections in addition to the current requirement that proceeds from sale of collection items be used to acquire other items for collections.
The amendments contained in the Exposure Draft would be effective upon issuance of a final Accounting Standards Update. The amendments would be applied on a prospective basis with retrospective application permitted.
The full text of the Exposure Draft is available here.
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