{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/958/20/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"958","topic_title":"Not-for-Profit Entities","subtopic":"958-20","subtopic_title":"Financially Interrelated Entities","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Contributions Received for a Financially Interrelated Beneficiary","paragraphs":[{"citation":"958-20-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_2C5C5EA8-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Pursuant to paragraph <a href=\"/asc/605/958/#605-958-25-27\" class=\"xref\">958-605-25-27</a>, if a <a href=\"/glossary/r/#recipient-entity\" class=\"term\" title=\"A not-for-profit entity (NFP) or charitable trust that accepts assets from a donor or other resource provider and agrees to use those assets on behalf of or transfer those assets, the return on investment of those assets, or both to a beneficiary that is specified by the donor or resource provider.\"><span>recipient entity</span></a> and a specified beneficiary are <a href=\"/glossary/f/#financially-interrelated-entities\" class=\"term\" title=\"A recipient entity and a specified beneficiary are financially interrelated entities if the relationship between them has both of the following characteristics: One of the entities has the ability to influence the operating and financial decisions of the other. One of the entities has an ongoing economic interest in the net assets of the other.\"><span>financially interrelated entities</span></a> and the recipient entity is not a <a href=\"/glossary/t/#trustee\" class=\"term\" title=\"An entity that has a duty to hold and manage assets for the benefit of a specified beneficiary in accordance with a charitable trust agreement. In some states, not-for-profit entities (NFPs) are organized under trust law rather than as corporations. Those NFPs are not trustees as defined because, under those statutes, they hold assets in trust for the community or some other broadly described group, rather than for a specific beneficiary.\"><span>trustee</span></a>, the recipient entity shall recognize a <a href=\"/glossary/c/#contribution\" class=\"term\" title=\"An unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner. Those characteristics distinguish contributions from:Exchange transactions, which are reciprocal transfers in which each party receives and sacrifices approximately commensurate valueInvestments by owners and distributions to owners, which are nonreciprocal transfers between an entity and its ownersOther nonreciprocal transfers, such as impositions of taxes or legal judgments, fines, and thefts, which are not voluntary transfers. In a contribution transaction, the resource provider often receives value indirectly by providing a societal benefit although that benefit is not considered to be of commensurate value. In an exchange transaction, the potential public benefits are secondary to the potential direct benefits to the resource provider. The term contribution revenue is used to apply to transactions that are part of the entity's ongoing major or central activities (revenues), or are peripheral or incidental to the entity (gains). See also Inherent Contribution and Conditional Contribution.\"><span>contribution</span></a> received when it receives assets (<a href=\"/glossary/f/#financial-asset\" class=\"term\" title=\"Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity.\"><span>financial</span></a> or <a href=\"/glossary/n/#nonfinancial-asset\" class=\"term\" title=\"An asset that is not a financial asset. Nonfinancial assets include land, buildings, use of facilities or utilities, materials and supplies, intangible assets, or services.\"><span>nonfinancial</span></a>) from the donor that are specified for the beneficiary. </span></span> <span class=\"sfragment\" id=\"sfr_2C5C60AD-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> For example, a foundation that exists to raise, hold, and invest assets for the specified beneficiary or for a group of affiliates of which the specified beneficiary is a member generally is financially interrelated with the <a href=\"/glossary/n/#not-for-profit-entity\" class=\"term\" title=\"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.\"><span>not-for-profit entity</span></a> or entities (NFPs) it supports and recognizes contribution revenue when it receives assets from the donor. See Examples 1 through 3 (paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/958/20/#958-20-55-3\" class=\"xref\">958-20-55-3 through 55-17</a></div>) for illustrations of this guidance. </span></span> </div> </div>","snippet":"Pursuant to paragraph 958-605-25-27, if a recipient entity and a specified beneficiary are financially interrelated entities and the recipient entity is not a trustee, the recipient entity shall recognize a contribution …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bc1da91e24aed0d6d1008bc3c9f45aab26305808b2831a7a7da58724a72c08b8","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8488cd2cfe521de680e9170d4b9a96277f8cc37c9ee8b6c819be09150ef8b7f3","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}},{"block":null,"heading":"Beneficiary's Recognition of Interest in a Financially Interrelated Recipient Entity","paragraphs":[{"citation":"958-20-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_2C5C6271-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If a beneficiary and a recipient entity are financially interrelated entities, the beneficiary shall recognize its interest in the net assets of the recipient entity. See Examples 1 through 3 (paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/958/20/#958-20-55-3\" class=\"xref\">958-20-55-3 through 55-17</a></div>) for illustrations of this guidance. </span></span> <span class=\"sfragment\" id=\"sfr_2C5C6400-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Recognizing an interest in the net assets of the recipient entity and adjusting that interest for a share of the change in net assets of the recipient entity is similar to the equity method, which is described in Subtopic <a altsource=\"GUID-364345EC-08A6-4C30-85E5-9C78C181792D.ditamap\" class=\"ditamap\">323-10</a>. </span></span> </div> </div>","snippet":"If a beneficiary and a recipient entity are financially interrelated entities, the beneficiary shall recognize its interest in the net assets of the recipient entity. See Examples 1 through 3 (paragraphs 958-20-55-3 thro…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d3aed13d7073b8e684d2e5d3d472ef0c8e3b062f21633a26cfd7735c21718744","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}},{"citation":"958-20-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <a href=\"/updates/page-1833002/\" class=\"xref\">Paragraph not used</a>.</div> </div>","snippet":"Paragraph not used.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2b54d2a2bbbaccd4f55604dba2c91dce983f78147ba4c4c1f0762a19e2a81472","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:270328cb06e422cefbdc2b1bef58466e827ca07065ce86a6483b5a1891adb8e8","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}},{"block":null,"heading":"Equity Transactions","paragraphs":[{"citation":"958-20-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_2C5C656F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A transfer of assets to a recipient entity is an equity transaction if all of the following conditions are present: </span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_2C5C66C1-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The resource provider specifies itself or its <a href=\"/glossary/a/#affiliate\" class=\"term\" title=\"A party that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with an entity. See Control.\"><span>affiliate</span></a> as the beneficiary. </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_2C5C6810-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The resource provider and the recipient entity are financially interrelated entities. </span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_2C5C6946-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Neither the resource provider nor its affiliate expects payment of the transferred assets, although payment of investment return on the transferred assets may be expected. </span></span> </div> </li> </ol> </div> </div>","snippet":"A transfer of assets to a recipient entity is an equity transaction if all of the following conditions are present:\n(a) The resource provider specifies itself or its affiliate as the beneficiary.\n(b) The resource provide…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a2c65e382fb06bea7d842e14d0e0dc6742c7d8f5ad6f45f1f3516493b5ece3bc","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}},{"citation":"958-20-25-5","para":"25-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_2C5C6AAA-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If a resource provider specifies itself as beneficiary, it shall report an equity transaction as an interest in the net assets of the recipient entity (or as an increase in a previously recognized interest) (see paragraph <a href=\"/asc/958/20/#958-20-25-2\" class=\"xref\">958-20-25-2</a>). </span></span> </div> </div>","snippet":"If a resource provider specifies itself as beneficiary, it shall report an equity transaction as an interest in the net assets of the recipient entity (or as an increase in a previously recognized interest) (see paragrap…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aeebaea9b17faf104e23093e6d84fba2e9cef224d5475dfe70d8fbfe22dd01b8","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}},{"citation":"958-20-25-6","para":"25-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_2C5C6BE9-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If a resource provider specifies an affiliate as beneficiary of an equity transaction, the resource provider shall report an equity transaction as a separate line in its statement of activities, and the affiliate named as beneficiary shall report an interest in the net assets of the recipient entity (see paragraph <a href=\"/asc/958/20/#958-20-25-2\" class=\"xref\">958-20-25-2</a>). </span></span> </div> </div>","snippet":"If a resource provider specifies an affiliate as beneficiary of an equity transaction, the resource provider shall report an equity transaction as a separate line in its statement of activities, and the affiliate named a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d65db1e9a4d90ec007965d925f0fe116fed5d19378dd4b884cde265bd36e00b8","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}},{"citation":"958-20-25-7","para":"25-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_2C5C6D5D-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the resource provider specifies itself or its affiliate as the beneficiary and any of the conditions in paragraph <a href=\"/asc/958/20/#958-20-25-4\" class=\"xref\">958-20-25-4(b)</a> and <a href=\"/asc/958/20/#958-20-25-4\" class=\"xref\">958-20-25-4(c)</a> are not met, the transfer shall be accounted for as an asset by the resource provider and as a liability by the recipient entity, in accordance with paragraph <a href=\"/asc/605/958/#605-958-25-33\" class=\"xref\">958-605-25-33</a>. </span></span> </div> </div>","snippet":"If the resource provider specifies itself or its affiliate as the beneficiary and any of the conditions in paragraph 958-20-25-4(b) and 958-20-25-4(c) are not met, the transfer shall be accounted for as an asset by the r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fc273a11b16a689178f493ce986bcf4845f19c416d2e0694ea491f75e49e25dc","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:63cb69660731288eecc56c80ca3a102825b1dd0431697dfe844228a070546e17","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3df955b72a262fa0968741d1a7984ad312a0e6250549d1e5424889adce7ffa85","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3df955b72a262fa0968741d1a7984ad312a0e6250549d1e5424889adce7ffa85","downloaded_from":"2026-09-10T02:21:40.938Z","last_downloaded_at":"2026-09-10T02:21:40.938Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147481012","source_sha256":"dda0308af88687bfde6e7ba0981db88bc6a358a859903070147896cf4053f846"}}