FASB Changes to Accounting for Collections

By Keiter CPAs

FASB Changes to Accounting for Collections

By Keiter CPAs | Not-for-Profit Team

ASU 2019-03, Not-for Profit Entities (Topic 958) specifically addresses the use of proceeds from sales of collections and related disclosures.

In March 2019, the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update (“ASU”) 2019-03, Not-for Profit Entities (Topic 958): Updating the Definition of Collections. This ASU specifically addresses the use of proceeds from sales of collections and related disclosures. Previously, entities were not required (though could elect) to recognize contributions of works of art, historical treasures, and similar assets if the donated items were added to collections and met these three conditions:

  • Held for the public,
  • Preserved and protected,
  • The proceeds from any sale of such items could only be used to acquire additional items for collections.

With the new ASU, the restriction on use of proceeds is expanded to allow for such funds to also be used for direct care of existing collections. This policy should be disclosed in the financial statements, along with the entity’s definition of “direct care”. The amendments in this update are effective for annual financial statements issued for fiscal years beginning after December 15, 2019, and for interim periods with fiscal years beginning after December 15, 2020, with early adoption permitted. The amendments should be applied on a prospective basis.

Questions on this topic or other not-for-profit accounting regulation changes? Our not-for-profit team can help. Contact us: Email | 804.747.0000

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Keiter CPAs

Keiter CPAs

Keiter CPAs is a certified public accounting firm serving the audittax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial servicesconstructionreal estatemanufacturingretail & distribution industries and nonprofits. We also provide business valuations and forensic accounting servicesfamily office services, and inbound international services.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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