A contractor contributes services valued at $40,000 to build a new building for a private NFP organization. The net effect of this contribution in the organization's statement of activities is:

Question

Quizplus · Accepted Answer

The contribution of services valued at $40,000 by a contractor to a private not-for-profit (NFP) organization is recognized as an increase in contributions and an increase in expenses (if the services create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation). However, since there is no mention of donor restrictions, it is treated as an increase in net assets without donor restrictions. This reflects both the value of the contributed services as revenue and the corresponding expense, resulting in no net effect on the overall change in net assets, but it does increase the net assets without donor restrictions.

A Contractor Contributes Services Valued at $40,000 to Build a New