Donated materials are seldom recognized as a contribution and as an expense by a not-for-profit organization.

Question

Quizplus · Accepted Answer

Although SFAS No. 116 criteria for recognizing revenue for donated materials are somewhat restrictive and limit the recognition of donated materials by not-for-profit organizations, many NPOs do report donated materials. Guidance in the AICPA Audit and Accounting Guide Not-for-Profit Organizations suggests that donated materials (gifts-in-kind) should be recorded as contributions and as expenses (supplies expense or cost of goods sold) at fair value on the date of the gift if an objective, clearly measurable basis for fair value can be established.

Donated Materials Are Seldom Recognized as a Contribution and as an Expense