A not-for-profit museum holds a collection of historical treasures.It manages the treasures in a manner that meets all three criteria permitting the option to either capitalize the collection or not.The museum has chosen not to capitalize its collection.It then receives a donation of several items that it intends to sell to help meet operating expenses.How should the museum account for the donated items?

Question

Quizplus · Accepted Answer

DA museum that has chosen not to capitalize its collection must recognize the fair value of donated items as revenue or gains and assets when it receives the donation, as per accounting standards for not-for-profit organizations. However, it must also disclose the donation in the notes to the financial statements, providing transparency about the nature and financial impact of the donation, even though it plans to sell these items to meet operating expenses.

A Not-For-Profit Museum Holds a Collection of Historical Treasures