NFP GAAP: net assets, long‑lived asset gifts, endowments, expenses, and disclosures

The rules, one page each

1. Net assets with donor restrictions at year-end: donor limits vs board designationsWorked example

   Report only donor‑imposed purpose, time, or perpetual restrictions in net assets with donor restrictions until satisfied; board designations never change the net‑asset class.

2. Gifts for long‑lived assets: placed in service vs explicit holding periodTimeline

   Under current GAAP, donor‑restricted gifts to acquire or construct long‑lived assets are released when the asset is placed in service unless the donor explicitly imposes a time‑related use or holding requirement that extends beyond that event.

3. Expense reporting for NFPs: show both nature and function in one placeContrasting cases

   Provide an analysis of expenses by both natural classification and functional classification in a single location (on the face, in a separate statement, or in the notes) and disclose allocation methods for costs reported in multiple functions.

4. Required statements, cash‑flow options, and the liquidity‑and‑availability noteStep by step

   A complete NFP presentation includes a statement of financial position, a statement of activities, a statement of cash flows, and notes; if using the direct method, the indirect reconciliation may be omitted. Provide qualitative and quantitative liquidity‑and‑availability disclosures.

5. ASC 958 NFP contributions: conditional, restrictions, releasesDecision tree

   Recognize unconditional contributions and pledges when received or promised and classify them as with donor restrictions if the donor limits time or purpose; recognize conditional contributions only when the barrier is overcome. Reclassify to without donor restrictions when eligible costs are incurred or the stipulated time elapses; recognize donated services only if they create or enhance a nonfinancial asset or require specialized skills that would be purchased.