Chapter 15 - Net Assets

Section 1501 - Definition of Net Assets in Not-for-Profit Entities

1501.01
1501.02
1501.03

Nature of Net Assets

Components of Net Assets
Plant-related Net Assets

Section 1502 - Allocated Net Assets

1502.01
1502.02
1502.03
1502.04
1502.05

Definition of Allocated Functions

How Much Can Be Allocated
Recovery of Excess Allocations
Allocated Working Capital Function
Appropriations for Allocated Purposes

Section 1503 - Guidance on Contributions and Other Revenue

1503.01
1503.02
1503.03
1503.04
1503.05
1503.06
1503.07
1503.08
1503.09

Definition of Contributions
Value of Contributions
Non-cash Contributions
Contributions Versus Agency Transactions
Contributions Versus Exchange Transactions
Sequence of Using Resources
Revenue and Expense Versus Net Gains and Losses
Peripheral or Incidental Transactions
Special Events

Appendix 15A - Characteristics of Net Assets (USA Standard)

15A.01
15A.02
15A.03
15A.04
15A.05
15A.06
15A.07

Definition of Net Assets

Unrestricted Net Assets
Temporarily Restricted Net Assets
Permanently Restricted Net Assets
Allocations of Unrestricted Net Assets
Expense Versus Transfer
Plant-related Net Assets

Appendix 15B - Changes in Net Assets (USA Standard)

15B.01
15B.02
15B.03
15B.04
15B.05
15B.06
15B.07
15B.08
15B.09
15B.10

Guidance on Contributions
What is a Contribution?
Conditions Versus Restrictions
Contributed Services
Contributions Versus Agency Transactions
Sequence of Recording Restricted Revenues
Value of Contributions
Contributions Versus Exchange Transactions
Endowment Contributions
Revenue and Expense Versus Net Gains and Losses

SDA Accounting Manual - October 2008

Chapter 15 - Net Assets

Appendix 15C - Split-Interest Agreem ents (USA Standard)
15C.01
15C.02
15C.03
15C.04
15C.05
15C.06
15C.07
15C.08
15C.09
15C.10

Definition
Basic Accounting Rule
Expanded Fund Accounting
Control of Assets
Assets and Liabilities
Present Value Discount Rate
Calculation of Present Value
Contribution Revenue
Conditional Agreements
Beneficiaries O ther Than Trustee

Appendix 15D - T echnical Application Advice (USA Standard)

15D.01
15D.02
15D.03
15D.04

Donations To Worthy Student Funds

Mission Trip Appeals
Agency Funds Versus Revenue
Some Basic Requirements For Endowments

Appendix 15E - Decision F low charts (USA Standard)

15E.01
15E.02
15E.03
15E.04

Identifying a Contribution Transaction

Classifying Receipts of Assets
Identifying Promises to Give
Contributed Services

SDA Accounting Manual - October 2008

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Section 1501 - Definition of Net Assets in Not-for-Profit Entities

1501.01

Nature of Net Assets - International GAAP offers significant flexibility in the presentation of financial

activity, as long as the activity is presented in ways that are meaningful to the users of the financial statements. Notfor-profit organiz ations use different terminology than for-profit businesses to identify the amount that remains after
subtracting total liabilities from total assets. The concept of stewardship in not-for-profit organiz ations assumes that
this remainder does not belong to owners in the same way as equity in a business. Instead, it represents resources
held for the performance of a mission. Many not-for-profit organiz ations separate their various assets and liabilities
into distinct segments or funds. The remainder or fund balance of a segment will be significant to a particular
purpose, but may serve a narrower purpose than that of the organiz ation as a whole. To highlight the nature of the
remainder as the result of assets minus liabilities, and to apply it whether the reporting entity uses fund accounting or
not, this Manual refers to the accounts that represent this remainder as net assets.
1501.02

Com ponents of Net Assets - Every entity will have an unrestricted unallocated component of net

assets, which represents the amount that is available for management to use at its discretion to carry out the entitys
programs and services. (As discussed in Chapter 17, conferences separate unallocated net assets further, into tithe
and non-tithe funds.) Most entities will also have additional components of net assets to represent resources that have
been either restricted by donor instructions or designated by the governing committee for specific programs or
purposes. Management should have a clear understanding about which of these functions, by their nature and
purpose, can accept restricted gifts from donors or transfers from unallocated tithe or non-tithe funds. All entities that
have plant assets will also have at least one component of net assets related to those resources.
As discussed in Sections 702.02 and 702.05, the balances in each of the organiz ations various net asset
components should be reported in appropriate places in the financial statements. These concepts are illustrated in
Appendices 17A.01, 17A.03, and 17A.05 Note 18.
1501.03

Plant-related Net Assets - The net depreciated value of land, buildings, and equipment minus any

related debt will be represented by a net asset account known as Net Invested in Plant. This will be required whether
the organiz ation uses fund accounting or not. In addition, any unspent balance of depreciation funding and acquisition
funding from transfers of operating resources should be recorded in one or more allocated functions within a group
classified as Unexpended Plant net assets. Any unspent balance of resources from restricted donations for the
purchase or replacement of specified or general plant assets should be recorded in separate allocated functions apart
from unspent portions of cash transferred from operating funds.
Section 1502 - Allocated Net Assets
1502.01

Definition of Allocated F unctions - Previous sections indicated that restricted funds are those

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bearing a restriction imposed by a donor. It is not possible for the administration or the governing committee to place
a restriction on resources, but the committee can allocate certain portions of unrestricted funds to be used for
specific purposes. It is important to keep in mind that such actions simply allocate or separate a portion of the
unrestricted net assets for the specified function. Since the governing committee can designate an intended use of
unrestricted funds, it also has the authority to remove such designation whenever it wishes to do so.
1502.02

H ow M uch Can Be Allocated - The amount of unallocated resources that can be allocated should

be carefully considered. GCWP T 15 05 allows excess working capital to be set aside for specific purposes. Also,
GCWP T 25 25 requires use of an allocated function for currency exchange fluctuations. The governing committee
has a responsibility to set aside amounts to meet the organiz ations goals for specific programs and services, but
management also needs the flexibility of having some amount of unallocated resources to use at its discretion.
As a general rule, resources should be allocated for programs or services that meet the following criteria: they
should be attainable and related to the entitys mission, they should be of a long-term nature, and they should result
in relatively significant expenditures. It is not the intent of this process to allocate funds for little reason other than to
remove them from the unallocated classification.
1502.03

Recovery of Excess Allocations - Entries to increase or decrease the net assets of various functions

by transfers are made at least at the close of each year to reflect allocations made by the governing committee. It is
important to remember that transfers from unallocated functions to allocated functions can not exceed the unallocated
amounts that are available. In other words, it is not appropriate to conclude a fiscal year with a negative balance in
unallocated tithe or non-tithe, but with a positive balance in unrestricted allocated functions.
If the financial activity for the year results in a negative balance in the unallocated function, but positive balances
in unrestricted allocated functions, transfers should be made from one or more allocated functions in amounts at least
sufficient to eliminate the deficit in the unallocated function. Similarly, if an allocated function ends the year with a
negative balance, but there is no unallocated balance available to cover the deficit, such funding, if desired, can come
only from some other allocated function.
1502.04

Allocated W ork ing Capital F unction - O rganiz ations may choose to allocate a portion of unrestricted

net assets to a working capital function. The goal would be for this allocated function to be equal to the minimum
amount of working capital recommended by GCWP T 15 05 or a corresponding division working policy. Allocating
resources in this manner indicates to the governing committee that this amount is needed to maintain recommended
working capital and should not be committed to any other use. During the budgeting process, this allocated function
would help identify any need for additional working capital.
1502.05

Appropriations for Allocated Purposes - There are a few programs, such as Global Mission and

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Thirteenth Sabbath Special Projects, that involve a flow of resources from congregations to the General Conference
and then back from the General Conference to other denominational entities for use in designated projects. Which
entity (division or union) should record these resources as net assets, rather than as agency funds flowing to or from
other entities? At least for Global Mission and Thirteenth Sabbath, the General Conference retains a degree of control,
through the Divisions, over the portions of its resources that are used for these programs. It is understood that the
Divisions also typically make appropriations from resources at their discretion for the same projects. Because the
General Conference has asked the Divisions to monitor and maintain accountability for Global Mission and Thirteenth
Sabbath resources appropriated from the General Conference, these resources should be recorded as restricted
revenue, and allocated net assets, by the Divisions. Any similar appropriations made from discretionary resources
by the Divisions should be recorded as restricted revenue, and allocated net assets, by either the union or local
conference or mission, depending on which level of organiz ation the Division authoriz es to monitor and maintain
accountability for those programs.
Section 1503 - Guidance on Contributions and Other Revenue
1503.01

Definition of Contributions - International GAAP does not have specific standards or definitions

about charitable contributions. However, the concept is fairly universal, so this Manual uses the following definition.
A contribution is an unconditional and irrevocable transfer of cash or other assets in a voluntary nonreciprocal transfer
from a person or entity to a charitable, religious, or educational organiz ation.
1503.02

V alue of Contributions - International GAAP does not have specific standards about how and when

to recogniz e revenue from charitable contributions. However, it does require that non-cash assets be recorded at their
fair value when acquired. It would be consistent, then, to record all contributions at their fair value (debit an asset and
credit a revenue account). If the contribution consists of cash, fair value is its face value. If the contribution consists
of marketable securities or some other asset that is traded on an open exchange, the published values from that open
exchange should be consulted to determine fair value.
1503.03

Non-cash Contributions - In some parts of the world, the economic or cultural structure makes it

difficult for some individuals to convert their own assets into cash. When these individuals choose to give contributions
to their church, they give from what they have, whether that may be livestock, farm produce, or some other commodity.
Assuming that the organiz ation intends to sell the commodities, and use the cash proceeds for its programs and
services, International GAAP requires the following procedures.
Non-cash assets received in such transactions are to be recorded at their estimated fair value minus the estimated
costs to take possession, store, and sell the commodities. Unless such commodities are sold immediately, the
estimated net realiz able value of the assets is to be recorded as deferred or unearned revenue until the

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commodities are sold. (The organiz ation is not likely to realiz e any economic benefit and can not be sure of the
ultimate value until the items are sold. At the same time, however, it places a value for the items in the accounting
records to ensure accountability for them.) The organiz ation should accumulate any storage, maintenance, and selling
costs in prepaid expense accounts until the commodities are sold. At the time of sale, the proceeds and an
appropriate portion of the prepaid expenses are to be netted together, and the net realiz ed amount is to be recorded
as contribution revenue.
The donor may have specified that the proceeds of the contribution were to be used for tithe or offerings that the
recipient would be obligated to send on to higher denominational entities. Because the recipient organiz ation does
not recogniz e income until the commodities are sold, it also would not record any liability to the higher denominational
entities until the commodities are sold. Until sold, the items would not appear in any reports to higher entities, except
in their character as assets held for sale and deferred revenue.
The following sample entries illustrate the accounting for such non-cash contributions.
Debit: Commodities Held For Sale
1,500
Credit: Unearned Income
1,500
To record commodities received as a contribution, to be sold.
Debit: Prepaid Expense to Hold Commodities
450
Credit: Cash in Bank
450
To record expenses of storage and maintenance of commodities held for sale.
Debit: Cash in Bank
2,000
Credit: Prepaid Expense to Hold Commodities
450
Credit: Contribution Revenue - Tithe
1,000
Credit: Contribution Revenue - Local Project
550
Debit: Tithe Percentages (contra-income account)
120
Credit: Tithe Percentages Payable to Division
120
Debit: Unearned Income
1,500
Credit: Commodities Held For Sale
1,500
To record contribution resulting from sale of donated commodities.
1503.04

Contributions V ersus Agency T ransactions - Sometimes an individual gives money to a charitable

entity with instructions to pass the money on to some other charity, or to use it in some other manner, as directed by
the individual at a later date. As long as the charity holding the money has little or no discretion in how to use the
money, and the provider has the right to ask for return of the money, it can not be recorded as a contribution. It must
be recorded as an agency liability. (See Appendix 15D.03.)
1503.05

Contributions V ersus Exchange T ransactions - If a donor receives something from the

organiz ation, the transaction must be analyz ed to determine if any of it is an exchange.

(1) If the resource provider receives nothing of value, the transaction is a contribution.
(2) If value is received by the donor indirectly or incidentally, such as reduced crime from a drug-awareness
campaign, the transaction is a contribution.

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(3) If the donor receives something of value, but it is not in exchange for the assets transferred, the transaction
is a contribution. For example, some charities send bookmarks or pre-printed address labels with their
solicitation mailings. The potential donors can keep these items whether they make contributions or not. Any
donations received are contributions, and the cost of token gifts mailed out is fund-raising expense.
(4) If donors receive something of nominal value in exchange for their gifts, the transaction is still a contribution.
For example, organiz ations frequently give hats or shirts imprinted with their logo to donors who give more
than a certain amount. Generally, if the fair value of the thank-you object is less than about 2% of the
donation, the transaction is a contribution. The full amount received would be a contribution, and the cost of
the thank-you items would be fund-raising expense.
(5) If the resource provider receives something of more than token value, the value given must be compared to
the value received. If the relative values are approximately equal, it is a normal business transaction, with no
contribution. In contrast, there is a contribution element if the resource provider gives something to the
organiz ation and receives something of substantially lower value in return.
For example, a person may sell a building to a charity for much less than market value. The transaction is
part exchange and part contribution. The organiz ation would record a property asset at full market value, a
credit to cash for the price paid, and contribution revenue for the difference. (If fund accounting is used; in
the unexpended plant fund, debit assets purchased and credit cash; in the net invested in plant fund, debit
the asset at market value, credit assets acquired for the cash portion, and credit contribution revenue for the
difference.)
1503.06

Seq uence of Using Resources - The basic concept in using or spending contributions for any

particular purpose is as follows. Any donor-restricted funds available for that purpose are used first. Any committeedesignated funds available for that purpose are used next. Unrestricted unallocated resources are used last.
1503.07

Revenue and Expense V ersus Net Gains and L osses - Most of an organiz ation's activity will be

normal revenue or expense related to its charitable or religious purpose.

Many organiz ations, however, will

occasionally enter into unusual transactions that have elements of both revenue and expense. Can these events be
recorded at their net effect, or must the revenue and expense elements be recorded separately? Under certain
conditions, discussed below, revenue and expense may be reported at a net amount.
1503.08

Peripheral or Incidental T ransactions - Activity that results from peripheral or incidental transactions

or from events beyond the control of the organiz ation may be reported at their net effect on the financial statements.
Examples include occasional sale of buildings or equipment, gains or losses from settlement of lawsuits, gain or loss
after insurance for damage from casualties, and changes in market value of investments. Net gains or losses are
reported as increases or decreases to unallocated net assets unless they represent assets that were donor-restricted
for specific use. In that case, the net gain or loss would be recorded in the applicable allocated function.
1503.09

Special Events - Events such as banquets and telephone fund-raising need to be analyz ed to

determine if they are peripheral or incidental, or if they are a major and ongoing activity. A once-a-year telethon,
although infrequent, may still be major and ongoing if it typically raises a significant portion of the organiz ation's annual
budget. In contrast, a food fair held three or four times a year may still be incidental if it typically draws a small
participation or insignificant amounts of donations.

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If the event is a peripheral or incidental activity, the organiz ation has a choice of reporting either (a) the net gain
or loss or (b) the gross receipts and total costs. If the event is a major and ongoing activity, the organiz ation should
report the gross amounts of revenue and expense, but has two alternative methods of presentation. O ne alternative
is to report line items for revenue and expense, with possibly a subtotal for net support provided by the event. The
other alternative is to consider the event as part exchange (fair value the participants received) and part contribution
(excess of payments received over fair value given), and report the two parts separately. The following illustrates
these two alternatives:
Alumni Golf Tournament
Green Fees Collected
Golf Course Use Fee
Net Tournament Revenue
Contributions Received

Alternative # 1
$ 1,200
(500)
700

Alternative # 2
$ 600
(500)
100
600

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Appendix 15A - Characteristics of Net Assets (USA Standard)

15A.01 Definition of Net Assets - To comply with GAAP, not-for-profit organiz ations in the USA use the term
net assets to identify the amount that remains after subtracting total liabilities from total assets. The not-for-profit
philosophy presumes that this remainder does not belong to owners, but represents resources held for the
performance of a mission. Many not-for-profit organiz ations separate their assets and liabilities into distinct segments
or funds. The balance of any one fund will be significant to a particular purpose, but may serve a narrower purpose
than that of the organiz ation as a whole.
O ne objective of using the term net assets is to place a greater focus on the absence or existence of donorimposed restrictions on resources available to the organiz ation. Another objective is to focus attention and reporting
on the organiz ation as a whole, rather than on any particular fund, and to indicate that the term applies whether the
entity uses fund accounting or not. Further, the net assets, within each fund and for the organiz ation as a whole, will
be separated into three classes (unrestricted, temporarily restricted, and permanently restricted), depending on the
absence or existence of donor-imposed restrictions.
15A.02 Unrestricted Net Assets - Unrestricted net assets represent the net amount of resources available
without restriction for carrying out the entitys objectives. Unrestricted net assets may be further segregated to indicate
portions allocated for specific purposes by the organiz ation's governing body. Additions or deductions to this class
of net assets will result from regular operations of the organiz ation, including the use of specific portions of restricted
resources during the current fiscal year. Also, all operating expenses of the organiz ation will be recorded as decreases
in unrestricted net assets. While various types of operating activity will be recorded in individual accounts, all such
transactions will be closed into unrestricted net assets at the end of the fiscal year.
15A.03 T em porarily Restricted Net Assets - Temporarily restricted net assets represent resources whose use
is limited by donor-imposed stipulations that either expire with the passage of time or can be fulfilled by actions of the
organiz ation. Additions to this class of net assets will result from receipt of restricted donations or appropriations. As
implied previously, no expenses are charged directly to this class of net assets. As funds are spent for restricted
purposes, or time limits elapse, corresponding amounts of temporarily restricted net assets are released from
restrictions, and in effect, transferred to the unrestricted net assets accounts.
15A.04 Perm anently Restricted Net Assets - Permanently restricted net assets represent resources whose use
is limited by donor-imposed stipulations that neither expire with the passage of time nor can be fulfilled or removed
by actions of the organiz ation. This class of net assets works much like described above for temporarily restricted net
assets, except that this class is by definition permanent. This class would be used primarily for endowments, but
would also apply to donations of land or works of art, for example, if received with stipulations that they be used for

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a specified purpose, be preserved, and not be sold.

15A.05 Allocations of Unrestricted Net Assets - It is not possible for the administration or the governing
committee to place a restriction on resources, but the committee can allocate certain portions of unrestricted funds
to be used for specific purposes. Such actions simply allocate or separate a portion of the unrestricted net assets
for the specified function. Since the governing committee has designated the intended use of such allocated funds,
it also has the authority to remove such designation whenever it wishes to do so. Refer to Sections 1502.02, 1502.03,
and 1502.04 for additional denominational principles regarding allocated net assets.
15A.06 Expense V ersus T ransfer - In practice, conferences maintain a larger number of allocated functions than
other types of denominational entities because of the need for accountability for numerous different activities. For
conferences, all expenses are charged to appropriate allocated functions, and two major unallocated functions are
decreased only by use of transfers. For all other types of organiz ations, all expenses are charged to appropriate
unallocated functions, and any allocated functions are decreased only by use of transfers. Illustrations of this are
included in the Appendices for each type of organiz ation.
15A.07 Plant-related Net Assets - Like operating resources, net assets related to land, buildings, and equipment
will be separated among the three classes. The net depreciated value of unrestricted land, buildings, and equipment
minus any related debt will be classified as Unrestricted Net Assets: Net Invested in Plant. This will be true whether
the organiz ation uses fund accounting or not. The net depreciated value of plant assets that were donated for a
specific purpose or time period will be classified as Temporarily Restricted Net Assets. Any un-depreciable plant
assets that were donated with stipulations that they be used only for specific purposes, or never be sold, would be
classified as Permanently Restricted Net Assets.
The unspent balance of depreciation funding and acquisition funding from transfers of allocated operating
resources should be classified as Unrestricted Net Assets: Allocated (within the unexpended plant fund, if used). The
unspent balance of resources that have come from restricted donations for purchase or replacement of specified plant
assets or types of assets would be classified as Temporarily Restricted Net Assets. In many organiz ations, the
temporarily restricted net assets line on the financial statement will represent the total of a group of accounts that are
restricted for various acquisition projects.

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Appendix 15B - Changes in Net Assets (USA Standard)

15B.01 Guidance on Contributions - GAAP prescribes specific procedures for contributions in FAS 116, as
amended. This guidance applies equally to both commercial and not-for-profit organiz ations. The guidance on this
topic is very comprehensive, so the remainder of this section quotes specific sections of FAS 116. In addition, to help
readers analyz e contributions, this Manual includes Appendix 15D, which contains technical application advice, and
Appendix 15E, which consists of analytical flowcharts taken from FAS 116.
15B.02 W hat is a Contribution?
FAS 116.5 - A contribution is an unconditional transfer of cash or other assets to an entity, or a settlement
or cancellation of its liabilities, in a voluntary nonreciprocal transfer by another entity acting other than as
an owner. O ther assets include securities, land, buildings, use of facilities or utilities, materials and supplies,
intangible assets, services, and unconditional promises to give those items in the future.
FAS 116.6 - A promise to give is a written or oral agreement to contribute cash or other assets to another
entity; however, to be recogniz ed in financial statements there must be sufficient evidence in the form of
verifiable documentation that a promise was made and received. A communication that does not indicate
clearly whether it is a promise would be considered an unconditional promise to give only if it indicates an
unconditional intention to give that is legally enforceable (which depends on state law).
15B.03 Conditions vs. Restrictions
FAS 116.7 - A donor-imposed condition on a transfer of assets or a promise to give specifies a future and
uncertain event whose occurrence or failure to occur gives the promisor a right of return of the assets
transferred or releases the promisor from its obligation to transfer assets promised. In contrast, a donorimposed restriction limits the use of contributed assets; it specifies a use that is more specific than broad
limits resulting from the nature of the organiz ation, the environment in which it operates, and the purposes
specified in its articles of incorporation or its bylaws, or in comparable documents for an unincorporated
association.
FAS 116.57 - This Statement distinguishes between unrestricted gifts, restricted gifts, and transfers of cash
or other assets with conditions, which are similar to conditional promises to give. A donor-imposed restriction
limits the use of donated assets; however, a condition creates a barrier that must be overcome before assets
transferred or promised become contributions received or made. The distinction between a restriction and
a condition, although clear in concept, sometimes is obscure in practice.
FAS 116.60 - The Board concluded that a transfer of cash or other assets with a stipulation that the assets
be returned if a specified future and uncertain event occurs or fails to occur is fundamentally different from
both an unrestricted gift and a restricted gift. Imposing a condition creates a barrier that must be overcome
before the recipient of the transferred assets has an unconditional right to retain those promised assets. For
example, a transfer of cash with a promise to contribute that cash if a like amount of new gifts is raised from
others within 30 days and a provision that the cash be returned if the gifts are not raised imposes a condition
on which a promised gift depends.
FAS 116.61 - By imposing a condition, the transferor of assets not only retains a right of return of the
transferred assets, but also casts doubt on whether the intent of the transfer was to make a gift, to
conditionally promise a gift, or at the extreme, not to make a gift. Because donors impose very different kinds
of conditions, the likelihood of meeting a condition can range from probable to remote. The Board concluded
that if a transferor imposes a condition, a reasonable possibility exists that the condition will not occur and the
transferred assets will be returned and, thus, should be accounted for as a refundable advance.
15B.04 Contributed Services
FAS 116.9 - Contributions of services will be recogniz ed if the services received (a) create or enhance
nonfinancial assets or (b) require specializ ed skills, are provided by individuals possessing those skills, and

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would typically need to be purchased if not provided by donation. Services requiring specializ ed skills are
provided by accountants, architects, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers,
and other professionals and craftsmen. Contributed services and promises to give services that do not meet
the above criteria shall not be recogniz ed.
15B.05 Contributions V ersus Agency T ransactions
FAS 116.52 - A transfer of assets also may appear to be a contribution when a donor uses an intermediary
organiz ation as its agent or trustee to transfer assets to a third-party donee, particularly if the agent indirectly
achieves its mission by disbursing the assets. Although the transaction between the donor and the donee may
be a contribution, the transfer of assets from the donor is not a contribution received by the agent, and the
transfer of assets to the donee is not a contribution made by the agent.
FAS 116.53 - The recipient of assets who is an agent or trustee has little or no discretion in determining how
the assets transferred will be used. For example, if a recipient receives cash that it must disburse to any who
meet guidelines specified by a resource provider or return the cash, those receipts may be deposits held by
the recipient as an agent rather than contributions received as a donee. Similarly, if a recipient receives cash
that it must disburse to individuals identified by the resource provider or return the cash, neither the receipt
nor the disbursement is a contribution for the agent, trustee, or intermediary.
FAS 116.54 - In contrast, if the resource provider allows the recipient to establish, define, and carry out the
programs that disburse the cash, products, or services to the recipient's beneficiaries, the recipient generally
is involved in receiving and making contributions.
15B.06 Seq uence of Recording Restricted Revenue - All restricted revenue is to be recorded in temporarily
or permanently restricted revenue accounts associated with particular functions as it is received during the year. At
the end of each month and the year, amounts equal to what has been spent for each temporarily restricted function
will be reclassified or transferred to the unrestricted net assets section. This reclassification is identified on the
statement of changes in net assets as Amounts Released from Restrictions. This line item will appear as an
increase in the statement of changes in unrestricted net assets and as a decrease in the statement of changes in
temporarily restricted net assets.

(See Sections 1802.04, 1803.02, and 1803.03 for distinct principles for

organiz ations, such as those in Canada, that must record unspent restricted resources as deferred income.)
Restricted revenue transactions are illustrated in the sample financial statements in the Appendices for each type of
organiz ation.
15B.07 V alue of Contributions - All contributions should be recorded at their fair market values. This is easy
to accomplish for cash or cash equivalents, but takes more effort for non-cash contributions. Each organiz ation should
have a policy in place to determine when independent appraisals of value will be obtained for contributions of more
than a specified value. In the USA, treasurers should also be aware there are specific IRS reporting requirements
(Form 8283) for non-cash contributions over $ 500 and those over $ 5,000.
15B.08 Contributions V ersus Exchange T ransactions - If a donor receives something from the organiz ation,
the transaction must be analyz ed to determine if any part of it is an exchange rather than a contribution. Following
are some examples gleaned from professional literature.
(1) If the resource provider receives nothing of value, the transaction is a contribution.

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(2) If value is received by the donor indirectly or incidentally, such as reduced crime from a drug-awareness
campaign, the transaction is a contribution.
(3) If the donor receives something of value, but it is not in exchange for the assets transferred, the transaction
is a contribution. For example, some charities send bookmarks or pre-printed address labels with their
solicitation mailings. The potential donors can keep these items whether they make contributions or not. Any
donations received are contributions, and the cost of token gifts mailed out is fund-raising expense.
(4) If donors receive something of nominal value in appreciation for their gifts, the transaction is still a contribution.
For example, organiz ations frequently give hats or shirts imprinted with their logo to donors who give more
than a certain amount. Following IRS guidelines, if the fair value of the thank-you object is less than the
smaller of either $ 50 or 2% of the donation, it is a contribution. In that case, the total received would be a
contribution, and the cost of thank-you items would be fund-raising expense.
(5) If the resource provider receives something of more than token value, the value given must be compared to
the value received. If the relative values are commensurate, it is a normal business transaction, with no
contribution. In contrast, there is a contribution element if the resource provider gives something to the
organiz ation and receives something in return of substantially lower value.
For example, a person may sell a building to a charity for much less than market value. The transaction
is part exchange and part contribution. The organiz ation would record a property asset at full market
value, a credit to cash for the price paid, and contribution revenue for the difference. (If fund accounting
is used; in the unexpended plant fund, debit assets purchased and credit cash; in the net invested in plant
fund, debit the asset at market value, credit assets acquired for the cash portion, and credit contribution
revenue for the difference.)
As another example, a donor may give property to the organiz ation but reserve the right to live in it for the
remainder of his/her life. The organiz ation would record an asset at full market value, with a credit for the
same amount as temporarily restricted contribution revenue.
15B.09 Endow m ent Contributions - By their nature, endowment donations can be either perpetual or for a
specified term. If the endowment instrument specifies permanent existence, it would be recorded as an increase in
permanently restricted net assets. If the endowment instrument specifies a term to its existence, it would be recorded
as an increase in temporarily restricted net assets. At the end of its term, it would then be transferred as assets
released from restriction, and moved to unrestricted net assets.
In addition, endowments can specify that revenue earned on the principal is to be either restricted or unrestricted.
Any investment earnings that are restricted for use would be recorded as restricted support, and would be reclassified
as assets released from restriction only as they are used for the specified purposes. Any unrestricted investment
earnings would be recorded in an unrestricted investment revenue account.

15B.10 Revenue and Expense V ersus Net Gains and L osses - Most of an organiz ation's activity will be normal
revenue or expense related to its tax-exempt purpose. Many organiz ations, however, will have occasional unusual
transactions that have elements of both revenue and expense. Can these events be recorded at their net effect on
the organiz ation, or do their revenue and expense elements need to be recorded separately? Under certain conditions,
as discussed in Sections 1503.08 and 1503.09, revenue and expense may be reported at a net amount.

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Appendix 15C - Split-Interest Agreem ents (USA Standard)

15C.01 Definition - The principles discussed in Appendix 15B present challenges in accounting for instruments
known as split-interest agreements. When a donor enters into a written trust or other arrangement under which a
not-for-profit organiz ation receives benefits that are shared with other beneficiaries, such a document is defined as
a split-interest agreement. Unitrusts, annuity trusts, pooled income agreements, and revocable trusts are some of the
types of split-interest agreements that exist. In the USA, denominational entities currently administer a large number
of such agreements. Split-interest agreements frequently include the following characteristics:

A donor transfers specified assets to a not-for-profit organiz ation, or third party which acts as trustee.
The trustee invests the assets and manages them in accordance with the agreement.
The agreement may be revocable by the donor, or it may be irrevocable.
The trustee may or may not be a beneficiary, but is not the sole beneficiary.
The agreement is for a time period that is either a specified number of years, or until the demise of a specified
individual.
During the term of the agreement, distributions of income (and principal, if allowed) are made to the income
beneficiaries designated by the agreement.
At the end of the agreements term, the remaining assets are distributed to the stated remainder beneficiaries
according to the agreement.
The charitable gift portion may consist of either: the income earned on the transferred assets (defined as a
charitable lead interest), or the remaining assets (defined as a charitable remainder interest).
15C.02 Basic Accounting Rule - Under FAS 117, with its focus on the organiz ation as a whole, the organiz ation

should include in its financial statements the assets, liabilities, and net assets of all funds under its control and should
recogniz e contribution revenue for all unconditional interests it has in irrevocable agreements. Therefore, the basic
accounting rule for split-interest agreements is that the trustee of a split-interest agreement should record the assets
and liabilities under their control, and the unconditional beneficiary of a split-interest agreement should recogniz e any
contribution revenue associated with that agreement in their general-use financial statements. This basic rule is to
be used regardless of the extent to which fund accounting is used.
15C.03 Expanded F und Accounting - Appendix 17D illustrates an expanded fund accounting presentation for
organiz ations that administer a large number of split-interest agreements. It reflects the following principles:

Deferred gifts are recorded uniformly regardless of the extent to which fund accounting is used.

All releases of temporarily restricted net assets are reported in the O perating Fund.

Split-interest agreements that have not yet matured are held in an Annuity and/or Trust Accounting Fund.

When agreements mature, their resources are moved to the O perating Fund.

Deferred gifts that are unrestricted or were only time restricted, regardless of who the trustee is, should be
reported as unrestricted operating revenue, in the Fund in which the underlying assets were held or received. The
governing committee can transfer the portion of those resources that are in the O ther Funds to the O perating Fund
at any time thereafter.

Deferred gifts for which the reporting entity is not the trustee and which are purpose restricted should be reported
as temporarily restricted revenue in the O perating Fund or as permanently restricted revenue in the Endowment
Fund, following donor instructions.

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Deferred gifts for which the reporting entity is the trustee, which are purpose restricted, and which are held in an
annuity or trust accounting fund should be reported as revenue (gift portion) in the Fund in which they are held
when they are established. When they mature, they should be reported as transfers of temporarily restricted net
assets from that Fund to the O perating Fund. Then, in the reporting period when the purpose restrictions are met,
the amount used should be reported as released from restrictions, like all other temporarily restricted net assets
in the O perating Fund.
15C.04 Control of Assets - If the trustee does not have control of the irrevocable or revocable trust assets, the

trustee is not required to include any related asset or related liability in its financial statements. Most of the revocable
trusts for which denominational organiz ations are trustee specify that the trustor retains the right to control the
investment of the trusts assets.
15C.05 Assets and L iabilities - Assets received under split-interest agreements should be recorded by the
trustee at their fair value as of the date the gift is received. If the gift is a remainder interest, a liability should be
recorded for the net present value of the future payments due to the income beneficiaries under the agreement. The
value of the remainder interest is obtained by subtracting the present value of future payments to the income
beneficiary from the fair value of the assets. A liability should also be recorded for any amounts that will be paid to
remainder beneficiaries other than the trustee. A contribution should be recorded for the value of the assets received,
less the value of the related liabilities. If the gift is a lead interest, the net present value of the future income payments
to the charitable trustee should be recorded as a contribution. Then the liabilities to other income beneficiaries and
remainder beneficiaries should be recorded as the difference between the total assets and the contribution amount.
15C.06 Present V alue Discount Rate - When a trustee calculates the present value of the payments to the
beneficiaries, it should use a risk-free discount rate that is appropriate for the expected term of the agreement. At
the end of each year, the present value should be recalculated based on any changes in the expected future payments
to beneficiaries, which change according to life expectancies and other actuarial assumptions. Note, however, that
although the life expectancies and actuarial assumptions may change, the discount rate used for each agreement
should not be changed from the rate established when the agreement was first recorded.
15C.07 Calculation of Present V alue - The present value of a specific future dollar amount is equal to the
amount of funds that would have to be invested presently, at a stated rate, to yield that dollar amount at a particular
date in the future. Although, the easiest way to calculate present value is to use software designed for that purpose,
the formula to calculate it is as follows: PV = FV /( 1+ r ) n.
PV is the present value.
FV is the future value.
r is the discount (interest) rate per period.
n is the number of periods.
15C.08 Contribution Revenue - The trustee should record contribution revenue for the difference between the

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fair value of the assets received and the total of all liabilities related to the agreement. This contribution should be
classified as temporarily restricted revenue, unless the donor has permanently restricted the purpose for which it can
be used (such as an endowment), or unless the donor has given the trustee the immediate right to use the assets
without restrictions (such as a charitable gift annuity). If the purpose for which the gift can be used is unrestricted, it
is recorded as restricted revenue if the organiz ation is not free to use the resources until some future event specified
by the donor.
15C.09 Conditional Agreem ents - For revocable and irrevocable agreements that are conditional (see Section
15B.03), no amount is to be recogniz ed as revenue initially. An amount equal to the total assets of the agreement
should be recorded as a liability, in the form of a refundable advance. O nly when the condition has been substantially
met should the relevant amount be recorded as revenue.
15C.10 Beneficiaries Other T han T rustee - A charitable beneficiary that is not the trustee of an irrevocable
agreement should record in its general-use financial statements an account receivable asset and a temporarily
restricted contribution for its beneficial interest in the agreement. The transaction should be valued and recorded at
the date when the organiz ation is notified by the trustee that the agreement names the organiz ation as a beneficiary.
It should be considered a fiduciary responsibility of the trustee to notify the respective charitable beneficiaries when
split-interest agreements are established.

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Appendix 15D - T echnical Application Advice (USA Standard)

15D.01 Donations T o W orthy Student F unds
When donors specify what their gift is to be used for, it can be a challenge to those who solicit money as well as those
who have to record the transaction.
For example, an academy may receive a check for $ 3,000 in the mail, for its worthy student fund. Accompanying the
check is a note that says, Please apply $ 2,000 of this to our grandsons account, and then you may use the rest for
any other worthy student accounts. Is that a problem? If so, is there a solution?
It is well established that US tax law does not allow individuals to deduct as charitable contributions amounts that
benefit the donor or donors family. It also does not allow the donor a deduction if they specify the name of the
individual who is to benefit from their gift.
We understand that a contribution is allowable under the following conditions.
(1) The donor contributes to an established scholarship or worthy student fund of the school.
(2) The school then considers a person related to the donor or a person suggested separately by the donor, without
giving any assurance that any scholarship or benefit will be made to that person.
(3) The selection of the recipient is strictly on merit.
(4) At the time of the donors contribution to the scholarship or worthy student fund, the beneficiary or beneficiaries
of the fund are uncertain.
(5) The school has complete discretion in selecting the recipients of scholarship or worthy student funds.
A word of caution: if a school participates on a regular basis in a plan to transform payments on a students account
into charitable contributions it could risk getting itself and the donor into serious trouble. School and church
administrators should manage their activities so that potential providers of funds are welcomed, but are not placed
at risk for negative results.
15D.02 M ission T rip Appeals
Students who participate in mission trips typically ask their local congregations for donations to help them pay for
the trip, and churches typically indicate that such gifts are deductible.
US tax law says, Personaliz ed gifts, including those to church mission boards earmarked for a particular missionary
are generally not deductible. Does this rule out student missionary activity? Probably not, if we follow some rules.
The mission trip appeals and program need to be carefully structured to be defensible and legal.
(1) The trip should be sponsored by a church or school.
(2) The sponsor should set up a specific mission trip account in their accounting records. (That is a bookkeeping
account, not a separate bank account.) This is where the sponsor will keep track of all donations received and
how much is spent for the mission trip.
(3) The church or school board, or its finance committee, should also approve the details of the project. How many
students are expected to go? How many dollars will each one need for the trip? For example, if ten students are
going, and the travel cost is $ 2,000 each, the total project is then $ 20,000.
(4) The students then go out with proper instructions and raise the funds for the mission trip project. Relatives could
give to the mission trip project, as long as they do not name a particular student to benefit from their gift.
(5) If the actual plane ticket cost only $ 1,750, a donor who gave $ 2,000 would not get a partial refund.
(6) In our example, if only $ 18,000 were raised, either one student would have to stay home, no matter how much
he or she raised, the church or school or conference could pay the difference, or there could be additional lastminute fund-raising.
(7) If a student got sick and had to miss the trip, a family member who gave to the project would not get a refund.
The gift must be irrevocable to be a legitimate donation.

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Appendix 15D - T echnical Application Advice (USA Standard) (continued)

15D.03 - Agency F unds V ersus Revenue at Schools
T he Problem . At most SDA schools there are many bookkeeping accounts for agency or trust fund activity. Many
of these accounts result from fund-raising or extra-curricular activities, but some of them result from school policies
and billing practices. School accountants are sometimes unsure about which of these accounts should be recorded
as liabilities and which should be recorded as income and net assets.
For example, if someone gives money to a school for a teacher (an employee) to use in that teachers classroom
(which is merely part of the teachers assigned responsibilities), shouldnt the money be income to the school, rather
than an agency liability?
As another example, if a group of students are raising money for a music tour, or a mission trip, should the money be
income to the school, or is it an agency liability?
As a further example, if the school charges an entrance fee, and divides it between various activities and programs,
is it entirely income, or is some of it an agency liability?
T he Accounting Rule. During 2000, the accounting standard known as FAS 136 was issued to clarify the accounting
for these kinds of transactions. While FAS 136 does not approach the subject in the context of the specific examples
given above, it does provide guidance that can be applied to similar situations. This rule was applied in developing
the sample financial statements illustrated in Appendices 17B and 17D of this Manual. The criteria established by FAS
136 have been paraphrased into the following chain of questions and answers.
1. Does the resource provider reserve the right to revoke the transfer, redirect the use of the resources to a
different beneficiary, or demand a refund of the resources at any time?
a. If yes, classify and record the resources as an agency liability.
b. If no, go to item # 2.
2. If the resource provider specified a beneficiary (whether that is a program or an organiz ation), does the
recipient of the funds exercise control over that beneficiary, either directly or indirectly?
a. If yes, classify and record the resources as contribution revenue.
b. If no, go to item # 3.
[The first example above, regarding resources provided for classroom use, would probably result in a yes
answer to this question.]
[The second example, regarding music or mission trips, would probably result in a yes answer if the
school decides when and how to use the money, but would result in a no answer if some other group or
individual decides when and how to use the money.]
3. Are the recipient and the ultimate beneficiary financially interrelated organiz ations? (FAS 136 defines
interrelated as one entity having both (a) the ability to influence decisions of the other entity and (b) an ongoing
economic interest in the other entity.)
a. If yes, classify and record the resources as contribution revenue.
b. If no, go to item 4.

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15D.03 - Agency F unds V ersus Revenue at Schools (continued)

4. Does the resource provider explicitly grant the recipient the variance power to redirect the use of the resources
to a different beneficiary without obtaining approval from the provider?
a. If yes, classify and record the resources as contribution revenue.
[If the organiz ation wants to track the use of that money, the governing committee can vote to allocate
those funds to a particular purpose. Those resources would be unrestricted net assets, but they would
also be allocated net assets.]
b. If no, classify and record the resources as an agency liability.
[If a provider says, here is $ 1,000 to use for books or anything else you need for your classroom, the
answer to this question would be yes. If the school wanted to track the use of that donation or that
function, it would record the donation in a specific allocated account identified with the purpose of the
donation, and would track the use of the money through that account.]
[If the school has adopted a project, and students are raising money for it, or if the school has a worthy
student fund, and the provider makes a gift to the project or the worthy student fund (without insisting on
a particular student to benefit from it), the answer to this question would be yes, and the provider would
receive a donation receipt.]
[If a provider says here is $ 1,000, please use it for my grandchilds music trip, but not for anyone elses
trip, the answer to this question would be no. The school should acknowledge that they are holding the
providers money, but the receipt given to the provider should not in any way indicate that it is a deductible
contribution. If the child did not go on the trip, the school would refund the money to the provider, or use
it for an alternate purpose as directed by the provider.]
[If a provider insists that the money be applied to a specific students account, the answer to this question
would be no. However, instead of a credit to an agency liability account, it would credit the students
account. The receipt given to the provider would indicate payment on account rather than any indication
that it was a donation.]
Extra F ees and Activities. Another form of resources that some school accountants may be unsure about how to
classify is the portion of registration or entrance fees that are designated for such activities as boys or girls clubs,
library use, choir, band, or science fees, etc. While not specifically addressed by FAS 136, application of its general
philosophy leads to the following guidance.
Who determines the amount that is paid for an academic or extracurricular activity?
a. If the school sets the amount (such as the components of the registration fee), and requires that amount
from each student who participates, then classify and record each of those components as revenue. If
the school wants to track the use of that money, it can establish allocated net asset functions for as many
of these types of activities as necessary.
b. If the provider determines the amount given, go back through The Accounting Rule checklist above to
determine the appropriate accounting.

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Appendix 15D - T echnical Application Advice (USA Standard) (continued)

15D.04 Som e Basic Req uirem ents for Endow m ents
Charitable organiz ations, such as church schools, have always liked endowments as a way to appeal to donors
and generate extra resources. In their haste to accept donations any time they are offered, some schools overlook
the need to put the details in writing. This Manual offers the following guidance to help make it easier to prepare at
least a minimum amount of documentation for each endowment.
Professional literature defines an endowment as a fund in which a donor has stipulated in the gift instrument that
the principal is to be maintained intact and forever, and only the income from investment of the principal may be used.
There are variations on the theme, but this is a good starting place.
Sometimes auditors find that a donor has given money to a school, or a school has started an endowment fundraising campaign, or even has started using donations that have come in, but nothing has been written down to
indicate how the endowment is to be administered. There may be an assortment of memos or e-mails, but nothing
in one document to tie it all together.
An endowment agreement can be short or long, depending on the wishes of the donor. However, every
endowment agreement should answer at least the following basic questions.

What is the name of the endowment fund?

How will the fund be financed? (Cash, securities, other kinds of assets, etc.)
What is the specific purpose of the fund? Is that purpose related to the primary mission of the charitable entity?
What does the donor want the organiz ation to do if the original purpose is no longer appropriate for some reason
beyond the control of the administration?
What is the term of the endowment? (Is it perpetual, or is it for a given number of years?)
Does the donor require the funds to be invested in a specific manner?
Who is to manage the investing and disbursing of endowment resources?
Has the receiving organiz ation voted to accept the donation? [The governing committee should develop some
guidelines for what they will accept. O rganiz ations usually are not interested in managing endowments that benefit
only a very small group of individuals.]
Has the original donor accepted the plan as drafted?
O n the following page is a sample endowment agreement form. Some degree of legal counsel was used to draft

this form, but any entity that uses it should have their own legal counsel review it. The final document should contain
whatever terms the donor and the charity agree to.

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Sam ple Endow m ent Agreem ent

This endowment is to be known as the:
The resources for this endowment are to be supplied by:
Personal gift from
Fund-raising Campaign managed by
Proceeds from the Estate of
O ther
The amount of the gift (the Principal) is to be held and invested.
The choice of investments will be at the discretion of the governing committee of the Institution, subject
to the following restrictions, if any
.
The Principal is to be held for the following length of time (select one):
[ ] in perpetuity, or [ ] for
years.
Earnings on the Principal, such as interest and dividends, and gains on sales of investments, are to be
used for the following purpose:

Losses on sales of investments, and losses in value of investments, are to be accounted for as follows
(select one):
[ ] Reduce the amount of earnings and gains otherwise available for distribution
[ ] Reduce the amount held in principal
If the original purpose is no longer appropriate for some reason beyond the control of the institution, the
earnings may be used for the following purpose:

This endowment agreement is accepted by the Institution by:

Signature

Title

Date

The purpose and terms of this endowment agreement are acceptable to the donor(s):
Signature

Date

Signature

Date

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Appendix 15E.01 - How To Identify a Contribution Transaction (USA Standard)

Did the resource provider enter into

the transaction voluntarily?

No

This is not a contribution.

No

This is not a contribution, but it may

become one if conditions are met.

Yes
Did the resource provider transfer the
assets unconditionally?
Yes
Does the organization have discretion
to use the assets received for any
purpose it wants to?

No

This is not a contribution.

This may be an agency, trustee, or
intermediary transaction.

Yes
Did the entity give the resource
provider anything of value in return?

No

This is a contribution.

Yes
Did the organization give the resource
provider something of more than
nominal value?

No

This is a contribution for the amount

received. This is expense for the cost
of the small item given.

Yes
Did the entity give the resource
provider something of at least equal
value to the assets received?

No

This is a contribution to the extent that

the value received exceeds the value
of the item given.

Yes
This is not a contribution. It is an
exchange transaction.

Assumptions: The transaction is not a tax incentive, tax exemption, or tax abatement.
The resource provider is not acting as an owner of the recipient organization.

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Appendix 15E.02 - Classifying R eceipts of Assets (USA Standard)

C an the organization retain the

transferred assets without regard to
any future and/or uncertain event (a
donor-imposed condition)?

No

R ecognize the transfer of assets as a

refundable advance (a liability
account) until the conditions are
substantially met.

No

Assets and liabilities are not required

to be identifed by net asset class.

No

Is the transfer income or gains from

investing restricted net assets?

Yes
Does the transfer increase the
organization's net assets?
Yes
Is the transfer of assets voluntary and
non-reciprocal?
Yes

H as the donor limited the entity's use

of the assets to any specific purpose
(a donor-imposed restriction)?

Yes

No

No

R ecognize the transfer of assets as an

increase in unrestricted net assets in
the current period.

Yes
C an the restriction ever be removed
by the passage of time or by actions of
the organization?

No

R ecognize the transfer of assets as an

increase in permanently restricted net
assets in the current period.

Yes
R ecognize the transfer of assets as an
increase in temporarily restricted net
assets in the current period.

Assumptions: This is a transfer of assets from an entity acting other than as an owner. The entity
reports contributions whose restrictions are met in the same period as temporarily restricted
revenues, and then as reclassifications to the changes in unrestricted net assets.

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Appendix 15E.03 - Identifying P rom ises to G iv e (USA Standard)

R eceive a communication from a
potential donor.

Is the communication evidenced by a

form of verificable documentation?

No

Yes

Is the communication a promise?

Yes

No

Do not record anything.

U nsure

Is the communication legally

enforceable?

No

Yes
Assume the communication is a
promise to give.
Yes
Does the communication indicate the
promise is unconditional?

U nsure

If communication is ambiguous, and

you are unable to resolve ambiguity
with the donor, assume that the
promise is conditional.

Yes
No

Yes
R ecord the promise as either
unrestricted, temporarily restricted, or
permanently restricted revenue, using
the classification flowchart found at
Appendix 1 5 E .0 2 .

Is there only a remote possibility that

the condition will not be met?

No

R ecord the promise as a refundable

advance. Then record it as revenue
only after the condition has been
substantially met.

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Appendix 15E.04 - Contributed Serv ices (USA Standard)

R eceived donated services, or a

promise to give services, from an
individual or another entity.

Does the contributed service enhance

the value of the organization's nonfinancial assets?

Yes

R ecord revenue at the fair value of

services received or at the fair value of
the asset enhancement.

No
Does the service provided require
specialized sk ills?

No

Yes

Does the provider of the service

possess the required specialized
sk ills?

No

Yes
W ould the organization obtain and pay
for this service if it were not provided
by the donor?
Yes
R ecord revenue at the fair value of the
services received. R ecord expense
for the same amount in a
corresponding function.

No

Do not record contributed services.

Disclose details in the notes to the
financial statements.