ASC

ASC 210-958

Not-for-Profit Entities

210 Balance Sheet

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In brief

IntermediatePresentationDisclosureNot-for-profitFinancial statement presentation

This subtopic governs the not-for-profit statement of financial position (the NFP equivalent of a balance sheet). At a minimum the statement must report totals for assets, liabilities, net assets, net assets with donor restrictions, and net assets without donor restrictions, focusing on the entity as a whole (958-210-45-1). It also requires liquidity-related presentation and disclosure, including qualitative information about how the NFP manages liquid resources and quantitative information about financial assets available for general expenditures within one year (958-210-50-1A).

Key points (7)
  • A statement of financial position must focus on the NFP as a whole and report total assets, total liabilities, total net assets, total net assets with donor restrictions, and total net assets without donor restrictions (958-210-45-1).
  • Interfund receivables and payables are not entity assets or liabilities; if displayed, they must be labeled and arranged so their amounts are eliminated from total assets and liabilities (958-210-45-2); no particular statement format is required or precluded (958-210-45-3).
  • Assets and liabilities generally should be aggregated into reasonably homogeneous groups reflecting donor-imposed and other contractual restrictions to convey liquidity and financial flexibility (958-210-45-4 through 45-5).
  • Restrictions generally apply to net assets rather than specific assets, so assets need not be disaggregated by restriction; however, cash or other assets received with donor restrictions limiting use to long-term purposes may not be classified with unrestricted assets available for current use (958-210-45-6).
  • Limitations on cash and cash equivalents, contractual limitations on particular assets, and quantitative information on availability of financial assets for general expenditures within one year must appear on the face of the statement or in the notes (958-210-45-7).
  • Additional liquidity information may be provided by sequencing assets/liabilities by nearness to cash or maturity, using a classified current/noncurrent format, or note disclosure (958-210-45-8); health care NFPs must use a classified format under 954-210-45-1.
  • An NFP must disclose qualitative information on how it manages liquid resources for general expenditures within one year and quantitative information on availability of financial assets, considering nature, external donor/law/contract limits, and internal board limits (958-210-50-1A); board designations, including board-designated endowment funds, must be disclosed as to amounts and purposes (958-210-45-11).

For students. Exam questions turn on the two-class net asset model (with/without donor restrictions, after ASU 2016-14 eliminated the old three-class temporarily/permanently restricted split) and the required liquidity/availability disclosures. A common misunderstanding is thinking donor restrictions attach to specific assets — they attach to net assets, though long-term-purpose restricted cash still cannot be lumped with cash available for current use.

statement of financial positionnet assets with donor restrictionsnet assets without donor restrictionsliquidity and availability disclosureboard-designated endowmentdonor-imposed restrictionsinterfund itemsclassified balance sheet

Machine-generated study aid for ASC 210-958. Check the source paragraphs below.

210-958-00Status

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210-958-00-1
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Board-Designated Endowment Fund Amended Accounting Standards Update No. 2016-14 08/18/2016
Board-Designated Net Assets Added Accounting Standards Update No. 2016-14 08/18/2016
Designated Net Assets Superseded Accounting Standards Update No. 2016-14 08/18/2016
Designated Net Assets Added Accounting Standards Update No. 2014-06 03/14/2014
Donor-Imposed Restriction Amended Accounting Standards Update No. 2016-14 08/18/2016
Donor-Restricted Endowment Fund Added Accounting Standards Update No. 2016-14 08/18/2016
Endowment Fund Amended Accounting Standards Update No. 2016-14 08/18/2016
Funds Functioning as Endowment Added Accounting Standards Update No. 2016-14 08/18/2016
Net Assets Added Accounting Standards Update No. 2016-14 08/18/2016
Net Assets with Donor Restrictions Added Accounting Standards Update No. 2016-14 08/18/2016
Net Assets without Donor Restrictions Added Accounting Standards Update No. 2016-14 08/18/2016
Permanent Endowment Superseded Accounting Standards Update No. 2016-14 08/18/2016
Permanently Restricted Net Assets Superseded Accounting Standards Update No. 2016-14 08/18/2016
Temporarily Restricted Net Assets Superseded Accounting Standards Update No. 2016-14 08/18/2016
Temporary Restriction Superseded Accounting Standards Update No. 2016-14 08/18/2016
Term Endowment Added Accounting Standards Update No. 2016-14 08/18/2016
Unrestricted Net Assets Superseded Accounting Standards Update No. 2016-14 08/18/2016
958-210-45-1 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-210-45-4 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-210-45-5A Added Accounting Standards Update No. 2016-14 08/18/2016
958-210-45-6 through 45-11
 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-210-45-7 Amended Maintenance Update 2020-18 (PDF) 11/25/2020
958-210-45-8 Amended Maintenance Update 2020-18 (PDF) 11/25/2020
958-210-45-8 Amended Accounting Standards Update No. 2012-04 10/01/2012
958-210-45-11 Amended Accounting Standards Update No. 2014-06 03/14/2014
958-210-45-12 Superseded Accounting Standards Update No. 2016-14 08/18/2016
958-210-45-12 Added Accounting Standards Update No. 2016-01 01/05/2016
958-210-50-1 through 50-3
 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-210-50-1A Added Accounting Standards Update No. 2016-14 08/18/2016
958-210-55-2 through 55-4
 Amended Accounting Standards Update No. 2016-14 08/18/2016
958-210-55-5 through 55-8
 Added Accounting Standards Update No. 2016-14 08/18/2016

210-958-05Overview and Background

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210-958-05-1
This Subtopic provides guidance addressing the statement of financial position for not-for-profit entities (NFPs). A statement of financial position is the financial statement of an NFP that corresponds to the balance sheet of a business entity.
210-958-05-2
The primary purpose of a statement of financial position is to provide relevant information about an NFP's assets, liabilities, and net assets and about their relationships to each other at a moment in time. The information provided in a statement of financial position, used with related disclosures and information in other financial statements, helps donors, members, creditors, and others to assess the following:
  1. a
    The NFP's ability to continue to provide services
  2. b
    The NFP's liquidity, financial flexibility, ability to meet obligations, and needs for external financing.

210-958-15Scope and Scope Exceptions

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Overall Guidance

210-958-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 958-10-15. It discusses how to report assets, liabilities, and net assets in financial statements; however, it does not specify when to recognize or how to measure those elements.

210-958-45Other Presentation Matters

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Totals and Format

210-958-45-1
A statement of financial position shall focus on the not-for-profit entity (NFP) as a whole and shall report all of the following amounts:
  1. a
    Total assets
  2. b
    Total liabilities
  3. c
    Total net assets
  4. d
    Total net assets with donor restrictions
  5. e
    Total net assets without donor restrictions
  6. f
    Subparagraph superseded by Accounting Standards Update No. 2016-14.
210-958-45-2
This Subtopic does not preclude display of interfund items in a statement of financial position; rather, its requirement to display total assets and liabilities results in certain practical limits on how interfund items are displayed in a financial statement. For example, because receivables and payables between fund groups are not entity assets or liabilities, a statement of financial position shall clearly label and arrange those interfund items to eliminate their amounts when displaying total assets or liabilities.
210-958-45-3
This Subtopic does not emphasize or preclude specific statement formats. It permits a left-to-right or top-to-bottom balanced format as well as single-column, multicolumn, single-page, or multipage formats.

Classification of Assets and Liabilities

210-958-45-4
A statement of financial position, including accompanying notes to financial statements, provides relevant information about liquidity, financial flexibility, and the interrelationship of an NFP's assets and liabilities. That information generally is provided by aggregating assets and liabilities that possess similar characteristics into reasonably homogeneous groups that include the effects of donor-imposed restrictions as well as other contractual restrictions.
210-958-45-5
Classifying and aggregating items with similar characteristics into reasonably homogeneous groups and separating items with differing characteristics is a basic reporting practice that increases the usefulness of information. For example, entities generally report individual items of assets in homogeneous groups, such as cash and cash equivalents; accounts and notes receivable from patients, students, members, and other recipients of services; inventories of materials and supplies; deposits and prepayments for rent, insurance, and other services; marketable securities and other investment assets held for long-term purposes; and land, buildings, equipment, and other long-lived assets used to provide goods and services. Likewise, cash collections of receivables from patients, students, or other service recipients may differ significantly in continuity, stability, and risk from cash collections of pledges made to a special-purpose fundraising campaign. Classifying and reporting those receivables and collections of receivables as separate groups of assets and of cash inflows facilitates financial statement analysis aimed at objectives such as predicting amounts, timing, and uncertainty of future cash flows.
210-958-45-5A
As illustrated in paragraph 958-205-55-7, cash and cash equivalents of permanent endowment funds held temporarily until suitable long-term investment opportunities are identified may be included in the classification long-term investments. Likewise, cash held temporarily by a custodian for investment purposes may be included as part of investments in a statement of financial position rather than as cash.
210-958-45-6
Assets may be restricted by donors. For example, land could be restricted to use as a public park. Generally, however, restrictions apply to net assets, not to specific assets. Assets need not be disaggregated on the basis of the presence of donor-imposed restrictions on their use; for example, cash available for current use and without donor restrictions need not be reported separately from cash received with donor-imposed restrictions that is also available for current use. However, cash or other assets received with a donor-imposed restriction that limits their use to long-term purposes shall not be classified with cash or other assets that are without donor restrictions and are available for current use. The kind of asset whose use is limited either by a donor-imposed restriction or by governing board designations shall be described in the notes to the financial statements if the nature of the restriction or designation (that is, amount and purpose) is not clear from the description on the face of the statement of financial position.
210-958-45-7
The following information shall be displayed either on the face of the statement of financial position or in the notes to financial statements, unless otherwise required on the face of the statement of financial position:
  1. a
    Relevant information about the nature and amount of limitations on the use of cash and cash equivalents (such as cash held on deposit as a compensating balance) (see paragraph 958-210-50-3(b)). 
  2. b
    Contractual limitations on the use of particular assets. These include, for example, restricted cash or other assets set aside under debt agreements, assets set aside under self-insurance funding arrangements, assets set aside under collateral arrangements, or assets set aside to satisfy reserve requirements that states may impose under charitable gift annuity agreements (see paragraph 958-210-50-3(c)). 
  3. c
    Quantitative information, and additional qualitative information in the notes as necessary, about the availability of an NFP's financial assets at the balance sheet date to meet cash needs for general expenditures within one year of the balance sheet date (see paragraph 958-210-50-1A(b)).
210-958-45-8
Additional information about liquidity shall be provided by any of the following:
  1. a
    Sequencing assets according to their nearness of conversion to cash and sequencing liabilities according to the nearness of their maturity and resulting use of cash
  2. b
    Classifying assets and liabilities as current and noncurrent, as defined by Subtopic 210-10 (required by paragraph 954-210-45-1 for statements of financial position prepared by not-for-profit, business-oriented health care entities)
  3. c
    Disclosing in notes to financial statements any additional relevant information about the liquidity or maturity of assets and liabilities, including restrictions on the use of particular assets (see paragraph 958-210-50-1). 

Classification of Net Assets

210-958-45-9
The amounts for each of the two classes of net assets—with donor restrictions and without donor restrictions—are based on the existence or absence of donor-imposed restrictions. Information about the nature and amounts of different types of donor-imposed restrictions shall be provided either by reporting their amounts on the face of the statement of financial position or by including relevant details in notes to financial statements. Additionally, separate line items may be reported within net assets with donor restrictions or in notes to financial statements to distinguish between various types of donor-imposed restrictions, such as the following examples:
  1. a
    Assets, such as land or works of art, donated with stipulations that they be used for a specified purpose, be preserved, and not be sold.
  2. b
    Assets donated with stipulations that they be invested to provide a permanent source of income. These result from gifts and bequests that create a donor-restricted endowment that is perpetual in nature.
  3. c
    Support of particular operating activities.
  4. d
    Investment for a specified term.
  5. e
    Use in a specified future period.
  6. f
    Acquisition of long-lived assets.
210-958-45-10
A donor-imposed restriction may require that resources be used in a later period or after a specified date (time restrictions), or that resources be used for a specified purpose (purpose restrictions), or both. For example, gifts of cash and other assets with stipulations that they be invested to provide a source of income for a specified term and that the income be used for a specified purpose are both time and purpose restricted. Those gifts often are called term endowments.
210-958-45-11
Information about self-imposed limits also is useful, including information about voluntary resolutions by the governing board of an entity, such as resolutions to designate a portion of its net assets without donor restrictions to function as an endowment (sometimes called a board-designated endowment fund) or to designate a portion for a specific future expenditure (called board-designated net assets). Information about the amounts and purposes of board designations of net assets without donor restrictions shall be provided in notes to or on the face of financial statements in accordance with paragraph 958-210-50-3. (See Example 1 [paragraph 958-210-55-3] for an illustration of this guidance.)

210-958-50Disclosure

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210-958-50-1
A not-for-profit entity (NFP) shall disclose in notes to financial statements relevant information about the liquidity or maturity of assets and liabilities, including restrictions and self-imposed limits on the use of particular items, in addition to information provided on the face of the statement of financial position, if shown, in accordance with paragraph 958-210-45-8. Specific disclosure requirements to meet that objective include the requirements in this Subtopic.
210-958-50-1A
An NFP shall disclose the following:
  1. a
    Qualitative information in the notes to financial statements that is useful in assessing an entity's liquidity and that communicates how an NFP manages its liquid resources available to meet cash needs for general expenditures within one year of the date of the statement of financial position
  2. b
    Quantitative information either on the face of the statement of financial position or in the notes, and additional qualitative information in the notes as necessary, that communicates the availability of an NFP's financial assets at the date of the statement of financial position to meet cash needs for general expenditures within one year of the date of the statement of financial position (see paragraph 958-210-45-7(c)). Availability of a financial asset may be affected by:
    1. 1
      Its nature
    2. 2
      External limits imposed by donors, laws, and contracts with others
    3. 3
      Internal limits imposed by governing board decisions.
See example note disclosures in paragraphs
958-210-55-5 through 55-8
and 958-205-55-21.
210-958-50-2
An NFP shall disclose the following, if applicable, in the notes to financial statements and may include that information in qualitative disclosures on the availability of an NFP's financial assets in accordance with paragraph 958-210-50-1A(b):
  1. a
    Unusual circumstances, such as special borrowing arrangements, requirements imposed by resource providers that cash be held in separate accounts, and known significant liquidity problems
  2. b
    The fact that the NFP has not maintained appropriate amounts of cash and cash equivalents to comply with donor-imposed restrictions (see paragraph 958-450-50-3)
  3. c
    Information about significant limits resulting from contractual agreements with suppliers, creditors, and others, including the existence of loan covenants.
210-958-50-3
Section 958-210-45 discusses the following items that are required to be included in the notes to financial statements if they are not provided on the face of the statement of financial position:
  1. a
    A description of the kind of asset whose use is limited (see paragraph 958-210-45-6)
  2. b
    Information about the nature and amount of limitations on the use of cash and cash equivalents (see paragraph 958-210-45-7(a))
  3. c
    Contractual limitations on the use of particular assets (see paragraph 958-210-45-7(b))
  4. d
    Information about the nature and amounts of different types of restrictions that affect how and when, if ever, the resources (net assets) can be used (see paragraph 958-210-45-9)
  5. e
    Subparagraph superseded by Accounting Standards Update No. 2016-14.
  6. f
    Information about additional limitations placed on net assets, such as information about the amounts and purposes of board designations of net assets without donor restrictions required in accordance with paragraph 958-210-45-11.

210-958-55Implementation Guidance and Illustrations

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Illustrations

210-958-55-1
This Section, which is an integral part of the requirements of this Subtopic, provides general guidance to be used in the presentation of a statement of financial position by a not-for-profit entity (NFP).
210-958-55-2
In addition to the following Examples, guidance in paragraph 958-205-55-7 illustrates a statement of financial position and paragraph 958-205-55-5 provides the facts and transactions that are reflected in that illustrative statement.
210-958-55-3
As illustrated in paragraph 958-205-55-9, this Subtopic encourages the use of the terms net assets with donor restrictions and net assets without donor restrictions; however, other labels exist. For example, equity may be used for net assets, and other or not donor-restricted may be used with care to distinguish net assets with donor restrictions from net assets without donor restrictions. For example, the net asset section might be arranged as follows.
  • With donor restrictions: Perpetual in nature $XXX Purpose restricted XXX "Time-restricted only, for periods after 20X1" XXX XXX Without donor restrictions: Designated by the Board for [ purpose] $XXX Undesignated XXX XXX Net assets $XXX
210-958-55-4
At a minimum, paragraph 958-210-45-1 requires that the amounts for each of the two classes of net assets—net assets with donor restrictions and net assets without donor restrictions—and the total of net assets be reported in a statement of financial position. The captions used to describe those amounts must correspond with their meanings.
210-958-55-5
This Example illustrates disclosures on liquidity and availability of an NFP's financial assets as required by paragraph 958-210-50-1A. It provides two possible methods to meet the disclosure requirements, but there may be other ways for an NFP to meet the requirements. In this Example, Not-for-Profit Entity A (NFP A) has combined the disclosures about availability of its financial assets and liquidity into one note; however, these disclosures also may be presented in separate notes. Note G in paragraph 958-205-55-21 provides an additional example of the disclosures on liquidity and availability of an NFP's financial assets.
210-958-55-6
The following is a statement of financial position and example disclosure for NFP A.
  • Not-for-Profit Entity A Statements of Financial Position " June 30, 20X1" (in thousands) 20X1 Assets: Cash " $75,000 " Contributions receivable " 20,000 " Prepaid expenses " 5,000 " Short-term investments " 300,000 " Total assets " $400,000 " Liabilities: Accounts payable " $80,000 " Total liabilities " 80,000 " Net assets: Without donor restrictions " 300,000 " With donor restrictions " 20,000 " Total net assets " 320,000 " Total liabilities and net assets " $400,000 "
210-958-55-7
NFP A has $395,000 of financial assets available within 1 year of the balance sheet date to meet cash needs for general expenditure consisting of cash of $75,000, contributions receivable of $20,000, and short-term investments of $300,000. None of the financial assets are subject to donor or other contractual restrictions that make them unavailable for general expenditure within one year of the balance sheet date. The contributions receivable are subject to implied time restrictions but are expected to be collected within one year. NFP A has a goal to maintain financial assets, which consist of cash and short-term investments, on hand to meet 60 days of normal operating expenses, which are, on average, approximately $275,000. NFP A has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, as part of its liquidity management, NFP A invests cash in excess of daily requirements in various short-term investments, including certificate of deposits and short-term treasury instruments. As more fully described in Note XX, NFP A also has committed lines of credit in the amount of $20,000, which it could draw upon in the event of an unanticipated liquidity need.
210-958-55-8
NFP A presents a classified statement of financial position with additional qualitative information about availability of resources and liquidity in Note T.
  • Not-for-Profit Entity A Statements of Financial Position " June 30, 20X1 and 20X0" (in thousands) 20X1 20X0 Assets: Current assets Cash and cash equivalents " $4,575 " " $4,960 " Accounts and interest receivable " 2,130 " " 1,670 " Inventories and prepaid expenses 610 " 1,000 " Contributions receivable " 1,825 " " 1,200 " Short-term investments " 1,400 " " 1,000 " Long-term investments appropriated for current use " 10,804 " " 10,075 " Total current assets " 21,344 " " 19,905 " Noncurrent assets Contributions receivable " 1,200 " " 1,500 " "Assets restricted to investment in land, buildings, and equipment" " 5,210 " " 4,560 " "Land, buildings, and equipment" " 61,700 " " 63,590 " "Long-term investments, net of amounts appropriated" " 207,266 " " 193,425 " Total noncurrent assets " 275,376 " " 263,075 " Total assets " $296,720 " " $282,980 " Liabilities and net assets: Current liabilities Accounts payable " $2,570 " " $1,050 " Refundable advance 550 Grants payable 550 600 Notes payable 140 Annuity trust obligations 985 " 1,050 " Total current liabilities " 4,105 " " 3,390 " Noncurrent liabilities Refundable advance 100 Grants payable 325 700 Notes payable " 1,000 " Annuity obligations 700 650 Long-term debt " 5,500 " " 6,500 " Total noncurrent liabilities " 6,525 " " 8,950 " Total liabilities " 10,630 " " 12,340 " Net assets: Without donor restrictions "92,677" "73,619" With donor restrictions "193,413" "197,021" Total net assets "286,090" "270,640" Total liabilities and net assets " $296,720 " " $282,980 "
  • Note T
  • NFP A's financial assets available within one year of the balance sheet date for general expenditure are as follows.
    • Cash and cash equivalents " $4,575 " Accounts and interest receivable " 2,130 " Contributions receivable " 1,825 " Short-term investments " 1,400 " Other investments appropriated for current use " 10,804 " " $20,734 "
  • NFP A's endowment funds consist of donor-restricted endowments and a quasi-endowment. Income from donor-restricted endowments is restricted for specific purposes and, therefore, is not available for general expenditure. As described in Note Y, the quasi-endowment has a spending rate of 5 percent. $1.65 million of appropriations from the quasi-endowment will be available within the next 12 months.
  • As part of NFP A's liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. In addition, NFP A invests cash in excess of daily requirements in short-term investments. To help manage unanticipated liquidity needs, NFP A has committed lines of credit in the amount of $20 million, which it could draw upon. Additionally, NFP A has a quasi-endowment of $33 million. Although NFP A does not intend to spend from its quasi-endowment other than amounts appropriated for general expenditure as part of its annual budget approval and appropriation process, amounts from its quasi-endowment could be made available if necessary. However, both the quasi-endowment and donor-restricted endowments contain investments with lock-up provisions that would reduce the total investments that could be made available (see Note X for disclosures about investments).

210-958-60Relationships

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Balance Sheet

210-958-60-1
For classification of current assets and current liabilities, see Section 210-10-45.
210-958-60-2
For exclusion from current assets of funds that are clearly to be used in the near future for the liquidation of long-term debts, payments to sinking funds, or for similar purposes, including those restricted for those purposes, see paragraph 210-10-45-4.

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