# ASC 958-20-55: Not-for-Profit Entities — Financially Interrelated Entities — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/958/20/#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): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:9b480d09583cf7acb81568c062cbc16e3a0ffa8a71b3619ddf4d9971be29120d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 958-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/958/20/#55-implementation-guidance-and-illustrations) SEC content: no ##### [958-20-55-1](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:b4d45a99daf7291f18bead1522c922ad4d1900e32312557b1ca8cf4901fe0eb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section, which is an integral part of the requirements of this Subtopic, provides general guidance to be used by a [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.") (NFP) in reporting relationships with [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."). #### Implementation Guidance ##### [958-20-55-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:3b40de02c6116c1aa635dba35ebdad37b35cb68469bb35929ca8b3fd7a33156b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The flowchart in paragraph [958-605-55-74](https://asc.understandingaccounting.org/asc/605/958/#605-958-55-74) depicts the process of applying the requirements of Sections 958-20-15 and 958-20-25. ##### [958-20-55-2A](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-2A) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:79762a32134e127199cc605b2422c54a54e3806b4fffce4c11c9133cea56483a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although most of the relationships described in the definition of [economic interest](https://asc.understandingaccounting.org/glossary/e/#economic-interest "A not-for-profit entity's (NFP's) interest in another entity that exists if any of the following criteria are met: The other entity holds or utilizes significant resources that must be used for the purposes of the NFP, either directly or indirectly by producing income or providing services. The NFP is responsible for the liabilities of the other entity. See paragraph 958-810-55-6 for examples of economic interests.") used in Subtopic 958-810 are potentially [ongoing economic interests in the net assets of another](https://asc.understandingaccounting.org/glossary/o/#ongoing-economic-interest-in-the-net-assets-of-another "A residual right to another not-for-profit entity's (NFP's) net assets that results from an ongoing relationship. The value of those rights increases or decreases as a result of the investment, fundraising, operating, and other activities of the other entity."), some do not meet the criterion in paragraph [958-20-15-2(b)](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2). Only economic interests that are both ongoing and residual interests in the net assets are ongoing economic interests in the net assets of another. ##### [958-20-55-2B](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-2B) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:92f95334855df6b5287aac844d1a1c4c854be0fee39f5ee4078bd294575212a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An equity transaction differs from an [equity transfer](https://asc.understandingaccounting.org/glossary/e/#equity-transfer "An equity transfer is nonreciprocal. An equity transfer is a transaction directly between a transferor and a transferee. Equity transfers are similar to ownership transactions between a for-profit parent and its owned subsidiary (for example, additional paid-in capital or dividends). However, equity transfers can occur only between related not-for-profit entities (NFPs) if one controls the other or both are under common control. An equity transfer embodies no expectation of repayment, nor does the transferor receive anything of immediate economic value (such as a financial interest or ownership).") in that an equity transaction, as described in paragraph [958-20-25-4](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-4), involves a financially interrelated party either as a third party in a transfer from an entity to one of its affiliates or as a counterparty in a transfer from an entity to itself. In addition, an equity transaction, unlike an equity transfer, is reciprocal; the NFP or its affiliate named as the beneficiary receives an ongoing economic interest in the assets held by the recipient entity. See paragraph [954-220-45-2](https://asc.understandingaccounting.org/asc/220/954/#220-954-45-2) for guidance on how to present equity transfers for not-for-profit, business-oriented health care entities that present a [performance indicator](https://asc.understandingaccounting.org/glossary/p/#performance-indicator "A performance indicator reports results of operations. A performance indicator and the income from continuing operations reported by for-profit health care entities generally are consistent, except for transactions that clearly are not applicable to one kind of entity (for example, for-profit health care entities typically would not receive contributions, and not-for-profit health care entities would not award stock compensation). That is, a performance indicator is analogous to income from continuing operations of a for-profit entity."). #### Illustrations ##### [958-20-55-3](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:b26ddd759b4da23967a1dbf107f8d2590b66b2fe14307ed26a37a63a711587ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [958-20-15-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2) and [958-20-25-1 through 25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-1) . ##### [958-20-55-4](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:23310d1c165e65bc8a5a22ac8ac086b1b2ce5176339ade6aa93b71fe63f8c3fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Corporation sends dental supplies to University Foundation to be used by students in University's dental clinic. University Foundation's bylaws state that it is organized for the purpose of stimulating voluntary financial support from alumni and other donors for the benefit of University, especially for addressing the long-term academic priorities of University. As with most gifts it receives, University Foundation can choose the timing of the distribution to University and can place additional limitations on the distribution if those limitations are consistent with Corporation's restrictions. University does not control University Foundation. ##### [958-20-55-5](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:79a4b984d453dc2afd97a56a951e68e2bf52385062be7d0ef4830a6a540fbb5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. University Foundation recognizes the [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.") of the dental supplies ([nonfinancial assets](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.")) as an increase in assets and as [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.") revenue that increases [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).") because there are [donor-imposed restrictions](https://asc.understandingaccounting.org/glossary/d/#donor-imposed-restriction "A donor stipulation (donors include other types of contributors, including makers of certain grants) that specifies a use for a contributed asset that is more specific than broad limits resulting from the following: The nature of the not-for-profit entity (NFP) The environment in which it operates The purposes specified in its articles of incorporation or bylaws or comparable documents for an unincorporated association. Some donors impose restrictions that are temporary in nature, for example, stipulating that resources be used after a specified date, for particular programs or services, or to acquire buildings or equipment. Other donors impose restrictions that are perpetual in nature, for example, stipulating that resources be maintained in perpetuity. Laws may extend those limits to investment returns from those resources and to other enhancements (diminishments) of those resources. Thus, those laws extend donor-imposed restrictions.") and because University and University Foundation are financially interrelated entities (see paragraph [958-20-25-1](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-1)). University can influence the financial and operating decisions of University Foundation because the bylaws of University Foundation limit its activities to those that benefit University (see paragraph [958-20-15-2(a)](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2)). University has an ongoing economic interest in the net assets of University Foundation because the results of University Foundation's activities accrue to the benefit of University (see paragraph [958-20-15-2(b)](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2)). When University Foundation distributes the dental supplies to University, it reduces its assets and recognizes an expense and the expiration of the restriction. ##### [958-20-55-6](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:388d4769823778f7bd2ec5f3ac9c4f130894189728c47f11f63144e0557afdda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Periodically, in conjunction with preparing its financial statements, University recognizes the change in its interest in the net assets of University Foundation, which would include the gift of nonfinancial assets received by the foundation (see paragraph [958-20-25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-2)). Because payments from University Foundation are due in future periods, the increase (or decrease) in University's interest would be classified as a change in net assets with donor restrictions to reflect the time restriction. When the dental supplies and other assets are distributed to it, University would recognize the assets received and decrease its interest in the net assets of University Foundation. ##### [958-20-55-7](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:237a0eadfd58aad26bf8686ccc8e06eca425643805c6c476779181cf789ee696 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, instead, University controlled University Foundation, University would be able to access at will any assets held by University Foundation. Implying a time restriction on the gifts held by University Foundation would be inappropriate. When recognizing the change in its interest in University Foundation, University would report the resulting net assets in the same net asset classifications as University Foundation. ##### [958-20-55-8](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:de5de5839645ede52401410a67403ad62c640e61002ee3811cda018045ee37a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [958-20-15-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2) and [958-20-25-1 through 25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-1) . ##### [958-20-55-9](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:fdbd3c667acbf2fa33e9cf7e3ef4a7b12cf65ce90dc599245af9da8502144b7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Corporation transfers cash to Healthcare Foundation and requests that Healthcare Foundation use the gift to provide healthcare benefits to the community. Healthcare Foundation's bylaws state that it is organized for the purpose of stimulating voluntary financial support from donors for the benefit of Hospital, Nursing Home, and Walk-in Clinic, all of which are located in the community. Hospital, Nursing Home, Walk-in Clinic, and Healthcare Foundation are affiliates that are controlled by Healthcare System. ##### [958-20-55-10](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:af93f8c71062eca907fc05e36879beeb492c85aa3b260b631bc72c472743d229 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Healthcare Foundation would recognize cash and [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.") revenue that increases [net assets without donor restrictions](https://asc.understandingaccounting.org/glossary/n/#net-assets-without-donor-restrictions "The part of net assets of a not-for-profit entity that is not subject to donor-imposed restrictions (donors include other types of contributors, including makers of certain grants).") because Corporation did not specify a beneficiary for its gift. Healthcare Foundation can choose how to distribute the gift among the three affiliates (see paragraphs [958-605-55-76 through 55-77](https://asc.understandingaccounting.org/asc/605/958/#605-958-55-76) ). ##### [958-20-55-11](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:59660cbb3b9e6b1e2241478355e455b910b97ccb7fd117d99ef3ba33907c47ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Periodically, in conjunction with preparing their financial statements, Hospital, Nursing Home, and Walk-in Clinic recognize the changes in their interests in the net assets of Healthcare Foundation (see paragraph [958-20-25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-2)). When measuring its interest in Healthcare Foundation, each [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.") would include only the net assets of Healthcare Foundation that are restricted to that affiliate's use. None of them would include in their individual interest the net assets resulting from the gift received from Corporation because Healthcare Foundation can choose how to distribute the gift among the three affiliates. Healthcare System's financial statements would include the net assets resulting from the gift received from Corporation, as well as other changes in the net assets of Healthcare Foundation, in its interest in the net assets of the foundation. (An interest in the net assets of an affiliate would be eliminated if that affiliate were included in the consolidated financial statements of the interest holder.) ##### [958-20-55-12](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:1b886abcc94e5b8902c5e87f5afa5455b8b605153e519dc969e9b48eccc2452a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If Healthcare Foundation, Hospital, Nursing Home, and Walk-in Clinic entered into an agreement that specified how gifts without donor restrictions to Healthcare Foundation should be divided, each affiliate would also include its share of Healthcare Foundation's net assets without donor restrictions, computed in accordance with that agreement, when it measured its interest in Healthcare Foundation. Similarly, if Healthcare System directed that gifts without donor restrictions to Healthcare Foundation be distributed to the three affiliates in accordance with a specified formula, each affiliate would include its share of net assets without donor restrictions, computed in accordance with that formula, when it measured its interest in Healthcare Foundation. ##### [958-20-55-13](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:2206455e7758c82688039aeb547380be864f13d1e721ab99789a54f3fa315769 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If Corporation had specified that its gift be used for the benefit of Walk-in Clinic rather than giving without restriction, Healthcare Foundation would recognize contribution revenue that increases [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).") because Hospital, Nursing Home, Walk-in Clinic, and Healthcare Foundation are financially interrelated entities (see paragraph [958-20-15-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2)). Their relationship meets both requirements of paragraph [958-20-25-1](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-1). Hospital, Nursing Home, and Walk-in Clinic can influence the financial and operating decisions of Healthcare Foundation because all four NFPs are under common control and the bylaws of Healthcare Foundation limit its activities to support of its three affiliates (see paragraph [958-20-15-2(a)](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2)). Hospital, Nursing Home, and Walk-in Clinic each have an ongoing economic interest in the net assets of Healthcare Foundation because their rights to the assets held by Healthcare Foundation are residual rights in an ongoing relationship (see paragraph [958-20-15-2(b)](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2)). Walk-in Clinic would include the net assets resulting from the gift received from Corporation in its interest in the net assets of Healthcare Foundation. ##### [958-20-55-14](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:72e1f17a632b8bcbf8c31fe6327ef4f406ee921f2f4957bc7e85672b93f5dfd7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraphs [958-20-15-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2) and [958-20-25-1 through 25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-1) . ##### [958-20-55-15](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:d874e361c28524b2ba30d4a7e2cb6a66e2bbb01e8114d67a61a396bbb1a9ef7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Individual transfers cash to Arts Foundation and specifies that the money be used to support the expenses of the ballet. Arts Foundation's bylaws state that it is organized for the purpose of stimulating voluntary financial support from donors for the benefit of Community Ballet and Community Theater. At the time Arts Foundation was created, the three NFPs entered into an agreement that specifies that if a donor does not specify the NFP to which the gift should be transferred, the gift will be split equally between Community Ballet and Community Theater. The agreement also specifies that representatives from the three NFPs will meet annually and determine campaign priorities for the next year and the costs of operating Arts Foundation will be equally split between Community Ballet and Community Theater. Arts Foundation is not controlled by Community Ballet, Community Theater, or Individual. ##### [958-20-55-16](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:59bac0429016c57e3555a9486eda4571a86c6cc445df53e569490f7ba6acbab7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Arts Foundation would report assets and contribution revenue that increases net assets with donor restrictions because there are donor-imposed restrictions and because Community Ballet and Arts Foundation are financially interrelated entities (see paragraph [958-20-25-1](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-1)). Community Ballet has the ability to influence the operating and financial decisions of Arts Foundation because the agreement allows Community Ballet to participate in the policymaking processes of Arts Foundation (see paragraph [958-20-15-2(a)](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2)). The agreement also establishes Community Ballet's rights as residual rights because it specifies how the revenues and expenses of Arts Foundation will be shared (see paragraph [958-20-15-2(b)](https://asc.understandingaccounting.org/asc/958/20/#958-20-15-2)). When Arts Foundation distributes assets to Community Ballet, it reduces its assets and recognizes an expense. ##### [958-20-55-17](https://asc.understandingaccounting.org/asc/958/20/#958-20-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:21:53.308Z to 2026-09-10T02:21:53.308Z Record version: sha256:0bdc4f08be545831bea21b465c14b72e0f9255f28c6bae30c10a0ef2079d69e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Periodically, in conjunction with preparing their financial statements, Community Ballet and Community Theater recognize the changes in their interests in the net assets of Arts Foundation (see paragraph [958-20-25-2](https://asc.understandingaccounting.org/asc/958/20/#958-20-25-2)). Community Ballet would include the net assets resulting from the gift received from Individual in its interest in the net assets of Arts Foundation because Individual specified that the gift be used to support the ballet and Arts Foundation's bylaws limit it to supporting Community Ballet. Community Ballet would also include in its interest all other gifts restricted to its benefit and its share of net assets without donor restrictions because of the agreement among the three organizations that gifts to Arts Foundation that are not donor-restricted should be split equally between Community Ballet and Community Theater. Because payments from Arts Foundation are due in future periods, the increase (or decrease) in Community Ballet's interest would be classified as a change in net assets with donor restrictions to reflect the time restriction. When assets are distributed to Community Ballet, it recognizes the assets received and decreases its interest in the net assets of Arts Foundation.