Revenue Recognition for Contributions
Accounting for Contributions
Contributions are recognized when an unconditional promise to give is received. Revenue recognition depends on whether donor restrictions exist and whether the contribution is conditional or unconditional.
- Recognize unconditional promises immediately.
- Conditional promises are recognized only when conditions are substantially met.
- Restricted contributions increase net assets with donor restrictions.
- Unrestricted contributions increase net assets without donor restrictions.
Tip
Carefully distinguish donor restrictions from donor conditions on CPA exam questions.
Summary
The presence of conditions and restrictions determines when and how contribution revenue is recognized.