On March 1, 2018, a nonprofit organization received a donation of securities worth $4,500. When it prepared its financial statements at December 31, 2018, the securities had a fair value of $5,200. When it sold the securities on June 30, 2019, it received $4,600. The entity's accounting procedures call for reporting all unrealized and realized gains and losses in a single account. How should it record its gains and losses in 2018 and 2019?

Question

Quizplus · Accepted Answer

Nonprofits with equity securities that have readily determinable fair values, and investments in debt securities, must report them at fair value. Reporting investments at fair value means that the carrying amount of investments in the financial statements will usually need to be adjusted every year to the new fair value. It also requires simultaneous recognition, in the statement of activities, of any unrealized gains and losses caused by changes in fair value.

On March 1, 2018, a Nonprofit Organization Received a Donation