On the Horizon

Contributed Nonfinancial Assets (Gifts-in-Kind)

Stakeholders are encouraged to review and provide input on a proposed Accounting Standards Update (ASU) intended to increase transparency around contributed nonfinancial assets—commonly known as gifts-in-kind—received by not-for-profit organizations. The comment period concludes on April 10, 2020. (See related video in this issue of The FASB Outlook.)

Examples of contributed nonfinancial assets include fixed assets such as land, buildings, and equipment; the use of fixed assets or utilities; materials and supplies, such as food, clothing, or pharmaceuticals; intangible assets; and/or recognized contributed services.

The proposed ASU would require that a not-for-profit organization:
  1. Present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets
  2. Disclose:  
    1. Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets
    2. For each category of contributed nonfinancial assets received (as identified in (a)):  
      1. Qualitative information about whether the contributed nonfinancial assets were or are intended to be either monetized or utilized during the reporting period and future periods. If utilized, a description of the programs or other activities in which those assets were or are intended to be used.
      2. A description of any donor restrictions associated with the contributed nonfinancial assets.
      3. The valuation techniques and inputs used to arrive at a fair value measure, including the principal market (or most advantageous market) if significant, in accordance with the requirements in Topic 820, Fair Value Measurement. 
The proposed ASU, including information about how to submit comments, is available on the FASB website.


Reference Rate Reform

Trillions of dollars in loans, derivatives, and other financial contracts reference the London Interbank Offered Rate (LIBOR), the benchmark interest rate banks use to make short-term loans to each other. With global capital markets expected to move away from LIBOR, the FASB, the SEC, and other regulators and industry groups are preparing U.S. stakeholders for a successful transition.
In the first quarter of 2020, the FASB expects to issue a final standard that provides temporary, optional guidance to ease the potential accounting burden.  The guidance in the standard will make it easier to report interest rate changes for contracts that meet certain criteria. Eligible contract modifications can be accounted for as a continuation of those contracts—eliminating the need to remeasure or reassess contracts for accounting purposes. This provision applies to loans, debt, leases, and other arrangements. The guidance will also permit companies to preserve their hedge accounting during the period of the market-wide transition.

The guidance will apply only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued due to the reform. The guidance will expire on January 1, 2023.

The views expressed in this article do not necessarily reflect the views of the FASB. Official positions of the FASB are arrived at only after extensive due process and deliberation.