ASC 720-25

Contributions Made

720 Other Expenses

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In brief

IntermediateRecognition Initial measurement Not-for-profit Fair value

ASC 720-25 governs how a resource provider (any entity) accounts for contributions it makes, including unconditional promises to give. Contributions made are recognized as expenses in the period made, with a corresponding decrease in assets or increase in liabilities, and are measured at the fair value of the assets given (or of the donee liabilities cancelled). Conditional promises are not recognized until the barrier is overcome, using the same conditionality analysis as the contributions received guidance in 958-605.

Key points (7)

Contributions made are recognized as expenses in the period made and as decreases of assets or increases of liabilities depending on the form of the benefit given; unconditional promises to give cash are recorded as payables and contribution expense (720-25-25-1).
Whether a contribution or promise to give is conditional is determined under the Contributions Received Subsection of Section 958-605-25, and the same guidance applies to resource providers (720-25-25-1; 720-25-55-2).
If the fair value of a transferred asset differs from its carrying amount, a gain or loss is recognized on disposition of the asset (720-25-25-2; see 845-10-30-1 through 30-2).
Contributions made are measured at the fair value of the assets given, or, when made by settling or cancelling a donee's liabilities, at the fair value of the liabilities cancelled (720-25-30-1).
Unconditional promises to give expected to be paid in less than one year may be measured at net settlement value as a reasonable estimate of fair value (720-25-30-2).
The Subtopic applies to all entities; NFPs also look to 958-720, and recipients apply the contributions received guidance in 958-605-15-3 through 15-5A (720-25-15-1; 720-25-15-2).
No disclosures are required by this Subtopic for makers of promises or indications of intention to give because Topics 450 and 470 supply the relevant disclosure requirements (720-25-50-1).

For students. This is the mirror image of contributions received: the donor expenses the gift when made, but only if the promise is unconditional. The common mistake is accruing an expense for a conditional promise (or a mere intention to give) and forgetting to record a gain or loss when donated property's fair value differs from its carrying amount.

contributions made unconditional promise to give conditional contribution barrier fair value measurement net settlement value donated inventory resource provider

Machine-generated study aid for ASC 720-25. Check the source paragraphs below.

720-25-00Status

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720-25-00-1

The following table identifies the changes made to this Subtopic.

Paragraph	Action	Accounting Standards Update	Date

Conditional Contribution	Added	Accounting Standards Update No. 2018-08	06/21/2018
Contribution	Amended	Accounting Standards Update No. 2018-08	06/21/2018
Contribution	Amended	Accounting Standards Update No. 2010-07	01/28/2010
Donor-Imposed Condition	Added	Accounting Standards Update No. 2018-08	06/21/2018
Not-for-Profit Entity	Added	Accounting Standards Update No. 2018-08	06/21/2018

720-25-15-1 through 15-3	Amended	Accounting Standards Update No. 2018-08	06/21/2018
720-25-15-2	Amended	Accounting Standards Update No. 2014-09	05/28/2014
720-25-25-1	Amended	Accounting Standards Update No. 2018-08	06/21/2018
720-25-50-1	Amended	Accounting Standards Update No. 2018-08	06/21/2018
720-25-55-1	Added	Accounting Standards Update No. 2018-08	06/21/2018
720-25-55-2	Added	Accounting Standards Update No. 2018-08	06/21/2018

720-25-05Overview and Background

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720-25-05-1

This Subtopic provides guidance on accounting for contributions made, including unconditional promises to give.

720-25-15Scope and Scope Exceptions

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Entities

720-25-15-1

The guidance in this Subtopic applies to all entities. Not-for-profit entities (NFP) should see Subtopic 958-720 on other expenses for additional guidance on contributions made.

Transactions

720-25-15-2

The guidance in this Subtopic applies to contributions of cash and other assets, including promises to give made by resource providers. For all entities that receive contributions, see the contributions received guidance in paragraphs 958-605-15-3 through 15-5A.

720-25-15-3

The guidance in this Subtopic does not apply to the transactions and activities specified in paragraph 958-605-15-6, which is in the Contributions Received Subsection of that Subtopic.

720-25-25Recognition

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720-25-25-1

Contributions made shall be recognized as expenses in the period made and as decreases of assets or increases of liabilities depending on the form of the benefits given. For example, gifts of items from inventory held for sale are recognized as decreases of inventory and contribution expenses, and unconditional promises to give cash are recognized as payables and contribution expenses. For guidance on determining whether a contribution, including promises to give, is conditional, see the Contributions Received Subsection of Section 958-605-25.

720-25-25-2

If the fair value of an asset transferred differs from its carrying amount, a gain or loss shall be recognized on the disposition of the asset (see paragraphs

845-10-30-1 through 30-2

720-25-30Initial Measurement

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720-25-30-1

Contributions made shall be measured at the fair values of the assets given or, if made in the form of a settlement or cancellation of a donee's liabilities, at the fair value of the liabilities cancelled.

720-25-30-2

Unconditional promises to give that are expected to be paid in less than one year may be measured at net settlement value because that amount, although not equivalent to the present value of estimated future cash flows, results in a reasonable estimate of fair value.

720-25-50Disclosure

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720-25-50-1

This Subtopic does not require disclosures for makers of promises and indications of intentions to give because Topics 450 and 470 provide the relevant disclosure requirements.

720-25-55Implementation Guidance and Illustrations

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Implementation Guidance

720-25-55-1

See paragraph 958-720-55-1A for a diagram that depicts the process for determining whether a contribution is conditional in addition to distinguishing contributions from exchange transactions. Paragraphs

958-605-55-4 through 55-6

and 958-605-55-13A through 55-14I provide additional guidance and illustrations on what is a conditional contribution.

720-25-55-2

See paragraphs

958-605-55-17A through 55-17F

and

958-605-55-70A through 55-70T

for implementation guidance and illustrations on determining whether a contribution is conditional. That guidance applies to contributions made by a resource provider (for example, a corporate foundation, a corporation, or a not-for-profit entity [NFP]) as well as contributions received by a recipient.