# ASC 958-20-25: Not-for-Profit Entities — Financially Interrelated Entities — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/958/20/#25-recognition) 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): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:3df955b72a262fa0968741d1a7984ad312a0e6250549d1e5424889adce7ffa85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 958-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/958/20/#25-recognition) SEC content: no #### Contributions Received for a Financially Interrelated Beneficiary ##### [958-20-25-1](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:bc1da91e24aed0d6d1008bc3c9f45aab26305808b2831a7a7da58724a72c08b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Pursuant to paragraph [958-605-25-27](https://asc.understandingaccounting.org/asc/605/958/#605-958-25-27), if a [recipient entity](https://asc.understandingaccounting.org/glossary/r/#recipient-entity "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.") and a specified beneficiary are [financially interrelated entities](https://asc.understandingaccounting.org/glossary/f/#financially-interrelated-entities "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.") and the recipient entity is not a [trustee](https://asc.understandingaccounting.org/glossary/t/#trustee "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."), the recipient entity shall recognize a [contribution](https://asc.understandingaccounting.org/glossary/c/#contribution "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.") received when it receives assets ([financial](https://asc.understandingaccounting.org/glossary/f/#financial-asset "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.") or [nonfinancial](https://asc.understandingaccounting.org/glossary/n/#nonfinancial-asset "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.")) from the donor that are specified for the beneficiary. 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 [not-for-profit entity](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.") or entities (NFPs) it supports and recognizes contribution revenue when it receives assets from the donor. See Examples 1 through 3 (paragraphs [958-20-55-3 through 55-17](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-3) ) for illustrations of this guidance. #### Beneficiary's Recognition of Interest in a Financially Interrelated Recipient Entity ##### [958-20-25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:d3aed13d7073b8e684d2e5d3d472ef0c8e3b062f21633a26cfd7735c21718744 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 through 55-17](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-3) ) for illustrations of this guidance. 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 323-10. ##### [958-20-25-3](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:2b54d2a2bbbaccd4f55604dba2c91dce983f78147ba4c4c1f0762a19e2a81472 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Equity Transactions ##### [958-20-25-4](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:a2c65e382fb06bea7d842e14d0e0dc6742c7d8f5ad6f45f1f3516493b5ece3bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A transfer of assets to a recipient entity is an equity transaction if all of the following conditions are present: 1. a The resource provider specifies itself or its [affiliate](https://asc.understandingaccounting.org/glossary/a/#affiliate "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.") as the beneficiary. 2. b The resource provider and the recipient entity are financially interrelated entities. 3. c 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. ##### [958-20-25-5](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:aeebaea9b17faf104e23093e6d84fba2e9cef224d5475dfe70d8fbfe22dd01b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 [958-20-25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-2)). ##### [958-20-25-6](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:d65db1e9a4d90ec007965d925f0fe116fed5d19378dd4b884cde265bd36e00b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 [958-20-25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-2)). ##### [958-20-25-7](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:40.938Z to 2026-09-10T02:21:40.938Z Record version: sha256:fc273a11b16a689178f493ce986bcf4845f19c416d2e0694ea491f75e49e25dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the resource provider specifies itself or its affiliate as the beneficiary and any of the conditions in paragraph [958-20-25-4(b)](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-4) and [958-20-25-4(c)](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-4) 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 [958-605-25-33](https://asc.understandingaccounting.org/asc/605/958/#605-958-25-33).