# ASC 320-958-55: Investments—Debt Securities — Not-for-Profit Entities — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/320/958/#55-implementation-guidance-and-illustrations) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:ec8023c0825d4c4ef3d6c382a3fcdbb3488d318a8aec8ee059beebb44eca4293 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 320-958-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/320/958/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [320-958-55-1](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:b1d03348beb5da357fbffd0cd707a51b8b6d54eb6ff103d62f3f447f04d9ca2b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The term _debt security_ includes any [security](https://asc.understandingaccounting.org/glossary/s/#security "A share, participation, or other interest in property or in an entity of the issuer or an obligation of the issuer that has all of the following characteristics: It is either represented by an instrument issued in bearer or registered form or, if not represented by an instrument, is registered in books maintained to record transfers by or on behalf of the issuer. It is of a type commonly dealt in on securities exchanges or markets or, when represented by an instrument, is commonly recognized in any area in which it is issued or dealt in as a medium for investment. It either is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations.") representing a creditor relationship with an entity. Thus, the term debt security includes all of the following securities, among other items: 1. a U.S. Treasury securities 2. b U.S. government agency securities 3. c Municipal securities 4. d Corporate bonds 5. e Convertible debt 6. f Commercial paper 7. g All securitized debt instruments, such as collateralized mortgage obligations and real estate mortgage investment conduits 8. h Interest-only and principal-only strips 9. i Preferred stock that by its terms either must be redeemed by the issuing entity or is redeemable at the option of the investor 10. j A collateralized mortgage obligation (or other instrument) that is issued in equity form but is required to be accounted for as a nonequity instrument regardless of how that instrument is classified (that is, whether equity or debt) in the issuer's statement of financial position. ##### [320-958-55-2](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:785d69e1984e347b74d9ff3e7cf90a4d42655e1409b82d0b4fe601b99e49d3b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. However, the term debt security excludes all of the following instruments: 1. a Option contracts 2. b Financial futures contracts 3. c Forward contracts 4. d Lease contracts 5. e Swap contracts 6. f Receivables that do not meet the definition of security and, thus, are not debt securities, for example: 1. 1 Trade accounts receivable arising from sales on credit 2. 2 Loans receivable arising from consumer, commercial, and real estate lending activities of financial institutions and [not-for-profit entities](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") (NFPs). However, if those receivables have been securitized, they would meet the definition of a security, and thus be a debt security. Paragraph [320-10-55-3](https://asc.understandingaccounting.org/asc/320/10/#320-10-55-3) explains that, even if a loan could readily be converted into a security, the loan is not a debt security until it has been securitized. ##### [320-958-55-3](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:4a75fa9f2b011554d12e1bc20fbd3c5d3c75e332e917caeea52001a0f73de1a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-01](https://asc.understandingaccounting.org/updates/asu-2016-01/). #### Illustrations ##### [320-958-55-4](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:3985f3fd1ec1fa1ab898684e3f25bd07b089cc6373bda0bbf882b5dbb2c0ab95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the disclosures required by paragraph [958-320-50-2](https://asc.understandingaccounting.org/asc/320/958/#320-958-50-2) and a statement of activities that reports investment return in accordance with paragraphs [958-220-45-22 through 45-26](https://asc.understandingaccounting.org/asc/220/958/#220-958-45-22) . ##### [320-958-55-5](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:a7e2de4174e489f950b03270ac51a11542ecce6e36ecdbf66b8e72aacec0cc98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-14](https://asc.understandingaccounting.org/updates/asu-2016-14/). ##### [320-958-55-6](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:582c78979a639d9a9a58153c4d84265d6cd10e26c96794e605e59de22be338f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example has the following assumptions: 1. a Not-for-Profit Entity A (NFP A) invests cash in excess of daily requirements in short-term investments; during the year, those investments earned $1,275. 2. b Most long-term investments of NFP A's endowments are held in an investment pool, which earned income of $11,270 and had net gains of $15,450. 3. c Certain endowments are separately invested because of donors' requirements. The investments of those endowments earned income of $1,000 and increased in value by $1,500. 4. d [Subparagraph superseded by Accounting Standards Update No. 2016-14](https://asc.understandingaccounting.org/updates/asu-2016-14/). 5. e NFP A released from restrictions the full amount of [net assets with donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-with-donor-restrictions "The part of net assets of a not-for-profit entity that is subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") that were appropriated from the [donor-restricted endowment fund](https://asc.understandingaccounting.org/glossary/d/#donor-restricted-endowment-fund "An endowment fund that is created by a donor stipulation (donors include other types of contributors, including makers of certain grants) requiring investment of the gift in perpetuity or for a specified term. Some donors or laws may require that a portion of income, gains, or both be added to the gift and invested subject to similar restrictions. The term does not include a Board-Designated Endowment Fund. See Endowment Fund.") ($4,500) because the entity spent the funds for the required purpose. 6. f NFP A's governing board appropriated for expenditure $1,025 from its short-term investments. 7. g NFP A had $25 of gross [programmatic investing](https://asc.understandingaccounting.org/glossary/p/#programmatic-investing "The activity of making loans or other investments that are directed at carrying out a not-for-profit entity's purpose for existence rather than investing in the general production of income or appreciation of an asset (for example, total return investing). An example of programmatic investing is a loan made to lower-income individuals to promote home ownership.") income. The expenses related to the programmatic activity are included in operating expenses. ##### [320-958-55-7](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:2e8a3950c8f19ce7fb64562309e72694c3d1b0146cb4f5e40cd47748012b5d4e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A statement of activities of NFP A is illustrated as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FDF423DA-945E-4045-975D-BC9B113A1445-low.gif) Not-for-Profit Entity A Statement of Activities "Year Ended June 30, 20X1" Without Donor Restrictions With Donor Restrictions Total "Revenues, gains, and other support:" Contributions " $X,XXX " " $ X,XXX " " $XX,XXX " Investment return appropriated from short-term investments " 1,025 " Fees " X,XXX " " X,XXX " Programmatic investing return 25 Other XXX XXX Net assets released from restrictions Investment return appropriated and released for current operations from donor-restricted endowment " 4,500 " " (4,500)" \[Other net assets released from restrictions\] " X,XXX " " (X,XXX) " "Total operating revenues, gains, and other support" " XX,XXX " " XX,XXX " Expenses: Program A " XX,XXX " Program B " X,XXX " Program C " X,XXX " Management and general " X,XXX " Fundraising " X,XXX " Total operating expenses " XX,XXX " Operating revenues in excess of expenses " XX,XXX " Other changes: "Investment return, net" " 1,275 " " 29,220 " " 30,495 " Investment return appropriated for current operations from short-term investments " (1,025)" \[Other items considered to be nonoperating\] " X,XXX " " X,XXX " " X,XXX " Change in net assets " $XX,XXX " " $ X,XXX " " $XX,XXX " ##### [320-958-55-8](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:36682503ddfa4363831953d820c71450883fd2acf4a92809fd3943d8d58bd288 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. NFP A would add the following illustrative text to its note to financial statements that describes the measure of operations. - The board of trustees designates only a portion of NFP A's cumulative investment return for support of current operations; the remainder is retained to support operations of future years and to offset potential market declines. The amount computed and appropriated under the endowment spending policy of the investment pool and the amount appropriated from the investment return associated with the short-term investments are used to support current operations. ##### [320-958-55-9](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:adc6bd159fa7ccc4edfcc0b7fd4a3d09cc16f2ae371f7a2cf898e758cacacc8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-14](https://asc.understandingaccounting.org/updates/asu-2016-14/). ##### [320-958-55-10](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:618e781e4b114a713e5d5bcb51090cb3e1fd9bb7604a71e1962e769d1f68cb3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2016-14](https://asc.understandingaccounting.org/updates/asu-2016-14/). ##### [320-958-55-11](https://asc.understandingaccounting.org/asc/320/958/#320-958-55-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:38:12.012Z to 2026-09-09T23:38:12.012Z Record version: sha256:3dbbce29f27681ee8f210f6aee2d6bf06bc2219ddc5454a5cc146b3e47c33dbf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with the requirements in paragraph [958-320-50-2](https://asc.understandingaccounting.org/asc/320/958/#320-958-50-2), an NFP would disclose the aggregate carrying amount of investments by major types and may choose to combine these disclosure requirements with disclosures about the level in the fair value hierarchy as required in Topic 820 on fair value measurement. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-175C1D3F-6728-4C51-B416-6560A0866840-low.gif) 20X1 Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs Measured at Net Asset Value (Level I) (Level II) (Level III) 20X1 Total Investments Cash equivalents held by investment managers " $19,366 " " $19,366 " U.S. common and preferred stocks " 61,190 " " 61,190 " International common and preferred stocks " 71,973 " " 71,973 " Fixed income " $40,920 " " 40,920 " Equity funds " 20,210 " " $10,093 " " $10,068 " " 40,371 " - Hedge funds " 26,248 " " 26,248 " - Private equity " 39,090 " " 39,090 " - Real estate " 33,520 " " 33,520 " Pooled endowment Pooled endowment " 172,739 " " 40,920 " " 43,613 " " 75,406 " " 332,678 " Split-interest agreements U.S. common and preferred stocks " 12,970 " " 12,970 " Fixed income " 6,635 " " 6,635 " Total investments " $185,709 " " $47,555 " " $43,613 " " $75,406 " " $352,283 "