# ASC 958-30-55: Not-for-Profit Entities — Split-Interest Agreements — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/958/30/#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): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:97692661524658b98391d4aa89caf953b1bd380bd43720c24ba161ff4ba10a22 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 958-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/958/30/#55-implementation-guidance-and-illustrations) SEC content: no ##### [958-30-55-1](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:d6ff71d70f824e60a7379f330f60bc94aa5112c8983aa6ff611a389d7e04fb3e 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 in the recognition of [split-interest agreements](https://asc.understandingaccounting.org/glossary/s/#split-interest-agreement "An agreement in which a donor enters into a trust or other arrangement under which a not-for-profit entity (NFP) receives benefits that are shared with other beneficiaries. A typical split-interest agreement has the following two components: A lead interest A remainder interest."), particularly those with embedded derivatives. #### Illustrations ##### [958-30-55-2](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:8d44795c2fc69f27b616c98b72531f2a9b4d36dd1faf46f8fc7649e7e482534a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in Sections 958-30-25 and 958-30-30 for initial recognition and measurement of a [charitable remainder annuity trust](https://asc.understandingaccounting.org/glossary/c/#charitable-remainder-annuity-trust "A trust established in connection with a split-interest agreement, in which the donor or a third-party beneficiary receives distributions of a fixed amount during the agreement's term. Upon termination of the trust, a not-for-profit entity (NFP) receives the assets remaining in the trust."). ##### [958-30-55-3](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:fbe703a166627547119de5fccafcab445641dcc3ee4618107612a058e2c39b17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Not-for-Profit Entity A (NFP A) receives $100,000 in cash from a donor under a charitable remainder annuity trust agreement designating NFP A as the [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.") and charitable remainder beneficiary—a donee. The terms of the trust agreement require that NFP A, as trustee, invest the trust assets and pay $5,000 each year to an annuitant (an income beneficiary specified by the donor) for the remainder of the annuitant's life. Upon death of the annuitant, NFP A may use its [remainder interest](https://asc.understandingaccounting.org/glossary/r/#remainder-interest "The right to receive all or a portion of the assets of a split-interest agreement remaining at the end of the agreement's term.") for any purpose consistent with its mission. ##### [958-30-55-4](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:1793d4104dfb807a04560731f9767078bd613cf70c257e766e04317603820900 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. NFP A, as a donee, would recognize the [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 as revenue in the period the trust is established. The transfer is partially an exchange transaction—an agreement for annuity payments to a beneficiary over time—and partially a contribution. The contribution received by NFP A is the unconditional right to receive the remainder interest of the [annuity trust](https://asc.understandingaccounting.org/glossary/a/#annuity-trust "See Charitable Remainder Trust."). The amount of the contribution received by NFP A is 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 trust assets ($100,000 cash transferred) less the fair value of the estimated annuity payments (which is the present value of $5,000 to be paid annually over the expected life of the annuitant if present value techniques are used to measure fair value). Because NFP A must invest the underlying donated assets until the annuitant's death, the revenue recognized for this type of contribution—[donor-restricted support](https://asc.understandingaccounting.org/glossary/d/#donor-restricted-support "Donor-restricted revenues or gains from contributions that increase net assets with donor restrictions (donors include other types of contributors, including makers of certain grants).")—should be distinguished from revenues from gifts that are reported in the [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).") category (see paragraph [958-605-45-3](https://asc.understandingaccounting.org/asc/605/958/#605-958-45-3)). The death of the annuitant determines when the required annuity payments cease and when the trust expires and effectively removes all restrictions on the net assets of NFP A (see paragraph [958-30-45-5](https://asc.understandingaccounting.org/asc/958/30/#958-30-45-5)). ##### [958-30-55-5](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:38d1d0d5055b06bdd8993443f021b5342d5c59d7cb0469d282f95d1261b3b8ac 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/). ##### [958-30-55-6](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:dee2e44597539eb1c2ede9abc6f08e729431213d19fc3bbcc5e4c5f8c96fad35 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Cases provide an understanding of the applicability of paragraphs [958-30-25-7 through 25-14](https://asc.understandingaccounting.org/asc/958/30/#958-30-25-7) to various split-interest agreements: 1. a Remainder interest—period-certain, fixed payments (Case A) 2. b Remainder interest—period-certain, variable payments (Case B) 3. c Remainder interest—life-contingent, variable or fixed payments (Case C) 4. d Remainder interest—period-certain-plus-life-contingent, fixed payments (Case D) 5. e Remainder interest—period-certain-plus-life-contingent, variable payments (Case E) 6. f Lead trust—period-certain, fixed or variable payments (Case F) 7. g Lead trust—life-contingent, fixed or variable payments (Case G) 8. h Lead trust—period-certain-plus-life-contingent, variable or fixed payments (Case H). ##### [958-30-55-7](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:b63d500ae879e194e75a294b2a87365a6ee468dece46eaef66cbb91ea3eae63d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shares of common stock are contributed to the control of an NFP which is required to pay the donor or the donor's beneficiary an annual fixed cash payment for 20 years, after which time the remaining shares revert to the NFP. ##### [958-30-55-8](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:edbeaee63de3b737c08156bb77d22a825b5f17d7bb46cb5fc66f4c91c9a42484 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement (20 years), the NFP has a liability that does not require bifurcation of an embedded derivative. Because the periodic cash payment is a fixed dollar amount, the liability has no underlying and, thus, does not meet the criterion in paragraph [815-10-15-83(a)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-83) of the definition of a derivative instrument. Because there is no underlying, there is also no embedded derivative that warrants separate accounting under paragraph [815-15-25-1](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-1). ##### [958-30-55-9](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:81c31a03d269ff6cd38624afa9f23faa5ae330253ad1583ac32aec6424f3ca51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shares of common stock are contributed to the control of NFP, which is required to make 20 annual cash payments to the donor or the donor's beneficiary that are equal to a specified percentage of the fair value of the assets as of the beginning of each annual period (that is, a [charitable remainder unitrust](https://asc.understandingaccounting.org/glossary/c/#charitable-remainder-unitrust "A trust established in connection with a split-interest agreement, in which the donor or a third-party beneficiary receives distributions of a fixed percentage of the fair value of the trust's assets during the agreement's term. Upon termination of the trust, a not-for-profit entity (NFP) receives the assets remaining in the trust.")). After the 20 payments have been made, the remaining shares will revert to the NFP. ##### [958-30-55-10](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:cdc425f6393813c6c37cddaaa9d9fc348b624ebe67a9b8def690abd30b66a938 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement (20 years), the NFP has a liability that must be bifurcated because it contains an embedded derivative that warrants separate accounting unless a fair value election is made pursuant to Section 815-15-25 or Fair Value Option Subsections 825-10. Under paragraph [815-15-25-1](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-1), the liability represents a hybrid instrument that is composed of a debt host contract and an embedded equity-based derivative that is not clearly and closely related to the debt host contract and that would meet the definition of a derivative instrument if it were freestanding. That is, it meets all of the following criteria of paragraph [815-10-15-83](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-83): 1. a It has an underlying (price of shares). 2. b It has a notional amount (number of shares in the trust at the beginning of each annual period). 3. c It satisfies the no-or-smaller initial net investment characteristic in paragraph [815-10-15-83(b)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-83). 4. d It would meet the net settlement characteristic in paragraph [815-10-15-83(c)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-83) (because each annual payment is adjusted for the effect of the embedded equity-based derivative). ##### [958-30-55-11](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:097a46a88fadfa7a590555faec98779a490a11e7d7182d5fa043caead0f5bda8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The debt host contract represents the liability for the series of 20 annual payments that would be required based on the assumption that the fair value of the common stock does not change over the 20-year period. The embedded equity-based derivative relates to the increase or decrease in each of the 20 annual payments due to changes in the fair value of the common stock. ##### [958-30-55-12](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:800ada98759d7baf94783d1fe33d6f25b3d72772994f3af4160631814004b787 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shares of common stock are contributed to the control of an NFP, which is required to make annual cash payments to the donor or the donor's beneficiary that are either a fixed dollar amount or a specified percentage of the fair value of the assets at the beginning of each annual period until the death of the donor or the donor's beneficiary, upon which time the remaining shares will revert to the NFP. ##### [958-30-55-13](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:6eb2f18d1c3cff40a7942fef5104c611fa0168b5ccff121b43e29809db46b753 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement, the NFP has a liability that is not bifurcated because it is solely life-contingent and thus qualifies for the exception in paragraphs [815-10-15-52 through 15-57](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-52) . ##### [958-30-55-14](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:c6b124e4168e8f5bf4e7b88b2c95f26538a6899f0d8fc5f8fea1cf6dc09cd438 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shares of common stock are contributed to the control of an NFP, which is required to pay the donor or the donor's beneficiary an annual fixed cash payment for the longer of the beneficiary's remaining life or a specified period. The remaining shares then revert to the NFP. ##### [958-30-55-15](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:1bf4bc1458ac42b2ed529c06dd79bcbb1e5a81ec7b36664a03c69924612cca8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement, the NFP has a liability that, for purposes of applying Topic 815, must be analyzed as consisting of the following two separate liabilities: 1. a A liability relating to the period-certain cash payments 2. b A liability relating to the possible additional cash payments that are contingent upon the beneficiary living beyond the end of the period-certain payments. ##### [958-30-55-16](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:a17e5f2e7be813d29d4dcf9a0f71b30c82df5a6f1c384ba60f309a91c3f1a3fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The NFP's liability does not require the bifurcation of any embedded derivative because: 1. a The portion of the liability related to the fixed period-certain payments has no underlying. 2. b The portion of the liability related to the possible life-contingent payments qualifies for the exception in paragraphs [815-10-15-52 through 15-57](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-52) . ##### [958-30-55-17](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:5c15be2783cdb03a1b3298661ec2db534b132159e699f671c6e4e3c9c0816753 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Shares of common stock are contributed to the control of an NFP, which is required to pay the donor or the donor's beneficiary an annual cash payment equal to a specified percentage of the fair value of the assets at the beginning of each annual period for the greater of the beneficiary's remaining life or a specified period. The remaining assets revert to the NFP. ##### [958-30-55-18](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:f5ec8185439af8aefd7d27c73a0ac80aaf186221709f96f6da92c3b3c52818e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement, the NFP has a liability that, for purposes of applying Topic 815, must be analyzed as consisting of the following two separate liabilities: 1. a A liability relating to the period-certain cash payments 2. b A liability relating to the possible additional cash payments that are contingent upon the beneficiary living beyond the end of the period-certain payments. ##### [958-30-55-19](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:190c4d81a5293eb38a9eddda9931a5e8581a86acc23cff2de2cb1f0e7c93ba5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [815-15-25-1](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-1) requires that the equity-based derivative instrument embedded in the portion of the liability related to the period-certain variable cash payments be bifurcated from a debt host contract (consistent with the analysis in Case B). ##### [958-30-55-20](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:d0ac5e6ec5d4bc03877fb6ed81d58234b5790a8cd526340e9e9b9f5630fc496e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The equity-based derivative instrument embedded in the portion of the liability related to the possible life-contingent cash payments that can occur after the end of the specified period is not subject to Topic 815 because it qualifies for the exception in paragraphs [815-10-15-52 through 15-57](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-52) . ##### [958-30-55-21](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:2eec6ee48b6d9f0538a86b903db8bd57199cd49b1fdc4b910de34e8cd2fb4046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP receives cash from a donor, which is invested by the NFP in common equity securities. The donor designates the NFP as lead beneficiary. The NFP receives an annual cash payment of either a fixed amount or a specified percentage of the fair value of the investment amount at the beginning of each annual period for a specified period of time. After that time, the remaining assets revert to the donor or the donor's beneficiary. ##### [958-30-55-22](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:c859509f8c70bf470ef23a76033a76d60a9d7f45d987132af7da030ab67158c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement, the NFP has a liability that must be bifurcated. Under paragraph [815-15-25-1](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-1), the liability represents a hybrid instrument that is composed of a debt host contract and an embedded equity-based derivative that is not clearly and closely related to the debt host contract and that would meet the definition of a derivative instrument if it were freestanding. That is, it meets all of the following criteria of paragraph [815-10-15-83](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-83): 1. a It has an underlying (price of shares). 2. b It has a notional amount (number of shares at the beginning of each annual period). 3. c It satisfies the no-or-smaller initial net investment characteristic in paragraph [815-10-15-83(b)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-83). 4. d It would meet the net settlement characteristic in paragraph [815-10-15-83(c)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-83). ##### [958-30-55-23](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:d78b03578174988f7f334eca931f722f4fcc8a5efc1a2f05f112ce91491a34d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Regardless of whether the [lead interest](https://asc.understandingaccounting.org/glossary/l/#lead-interest "The right to the benefits (cash flows or use) of assets during the term of a split-interest agreement, which generally starts upon the signing of the agreement and terminates at either of the following times: After a specified number of years (period-certain) Upon the occurrence of a certain event, commonly either the death of the donor or the death of the lead interest beneficiary (life-contingent).") payments are fixed or variable, the value of the liability representing the remainder interest—the assets remaining at the end of the agreement that will be paid to the donor or the donor's beneficiary—is affected by changes in the equity value, thus requiring the embedded equity-based derivative to be bifurcated from the host contract unless a fair value election is made pursuant to Section 815-15-25 or the Fair Value Option Subsections of Subtopic 825-10. ##### [958-30-55-24](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:f5178c56bbcb0deea038564590fbdabdc53ecb738e06a023199ab09bddd86a92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP receives cash from a donor, which is invested by the NFP in common equity securities. The donor designates the NFP as lead beneficiary. The NFP receives an annual cash payment of either a fixed dollar amount or a specified percentage of the fair value of the investment amount at the beginning of each annual period until the death of the donor or the donor's beneficiary, at which time the remaining assets revert to the donor or the donor's beneficiary. ##### [958-30-55-25](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:15f7aabc6446dee526506f8900626235495cb63179e79ce44fbccb4a4c737d98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement, the NFP has a liability that is not subject to Topic 815 because the remainder interest liability relates to a single payment whose amount and timing is life-contingent and thus qualifies for the exception in paragraphs [815-10-15-52 through 15-57](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-52) . ##### [958-30-55-26](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:a75962b43f7932c38bbaf903fa907943f28c0e76e8af366153a7ef900ccca8cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An NFP receives cash from a donor, which is invested by the NFP in common equity securities. The donor designates the NFP as lead beneficiary. The NFP receives an annual cash payment for either a specified percentage of the fair value of the assets at the beginning of each annual period or a fixed dollar amount. That cash payment is made for the greater of the beneficiary's (or the donor's) remaining life or a specified period. After that time, the remaining assets revert to the donor or the donor's beneficiary. ##### [958-30-55-27](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:a4be24fa66be0e6c90641d839bd6dea5fca4f1f21cae2f679b5344a887c6656c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. During the term of the agreement, the NFP has a liability that is not subject to Topic 815 because, unlike the liability in Case E the period-certain aspect of the liability cannot be separated from the life-contingent aspect of the liability (because there is only one payment whose timing and value are affected by mortality risk). Thus, the remainder interest liability relates to a single payment whose amount and timing is life-contingent and thus qualifies for the exception in paragraphs [815-10-15-52 through 15-57](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-52) . ##### [958-30-55-28](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:78432af3b209dc42ab68ed790d9c5bb89c6a5ea8f83a1d4b0d617b91815aedf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If payment occurs only when the beneficiary (or donor) is alive, such as in an agreement in which the period is for the lesser of the beneficiary's (donor's) remaining life or a specified period, then every payment is life-contingent and qualifies for the exception in paragraphs [815-10-15-52 through 15-57](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-52) . ##### [958-30-55-29](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:f6a9b9f884b94f30c69478cbe1a43bd2bc3cc4066da7633622cae68b419710de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If during the terms of a greater-of-period-certain-or-life-contingent agreement, the beneficiary dies before the end of the period-certain terms in the agreement, that change in circumstance eliminates the life-contingent aspect of the contract. Thus, the agreement is now only a period-certain agreement and mirrors the agreement outlined in Case F requiring bifurcation of the embedded derivative. ##### [958-30-55-30](https://asc.understandingaccounting.org/asc/958/30/#958-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:22:23.587Z to 2026-09-10T02:22:23.587Z Record version: sha256:0bf7ea2c5abb2ce6dd066ebffa000005c589f5703b52328ff22152fe54529d80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example provides the following journal entries related to the guidance in Sections 958-30-25, 958-30-35, and 958-30-40. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-250BC60E-AA41-4464-B3D8-B7FA757CCAEC-low.gif) Creation of the Agreement Debit Credit Credit Assets Held by a Third Party Charitable lead trust Beneficial interest in lead trust Contribution revenue (a) Charitable remainder trust Beneficial interest in remainder trust Contribution revenue (a) Assets Held by the NFP Contribution revenue (a) Charitable lead trust Assets held in charitable lead trust Liability for amounts held for others Contribution revenue (a) Charitable remainder trust Assets held in charitable remainder trust Liability under trust agreement Contribution revenue (a) Charitable gift annuity Assets Annuity payment liability Contribution revenue (a) Pooled income fund Assets of pooled income fund Discount for future interest (Deferred revenue) Contribution revenue (a) - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-FE701418-8CC7-4FAC-8553-FBE505B3498D-low.gif) Investment Income and Changes in the Fair Value of Assets Held Under the Agreement (b) Debit Credit Assets Held by a Third Party Charitable lead trust No entry No entry Charitable remainder trust No entry No entry Assets Held by the NFP Charitable lead trust Assets held in charitable lead trust Liability for amounts held for others Charitable remainder trust Assets held in charitable remainder trust Liability under trust agreement Charitable gift annuity Assets Investment return (c) Pooled income fund Assets of pooled income fund Liability to life beneficiary - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-DD7A6FCD-7FC2-4BCD-885B-8A9397F03382-low.gif) Distribution to Holder of Lead Interest Debit Credit Assets Held by a Third Party Charitable lead trust Cash Beneficial interest in lead trust Charitable remainder trust No entry No entry Assets Held by the NFP Charitable lead trust Cash Assets held in charitable lead trust Charitable remainder trust Liability under trust agreement Assets held in charitable remainder trust Charitable gift annuity Annuity payment liability Cash Pooled income fund Liability to life beneficiary Assets of pooled income fund Reclassification of Amounts Distributed to Holder of Lead Interest When All Restrictions Are Met Debit Credit Assets Held by a Third Party Charitable lead trust Net assets with donor restrictions— Reclassifications out "Net assets without donor restrictions— Reclassifications in" Charitable remainder trust Not applicable Not applicable Assets Held by the NFP Charitable lead trust Net assets with donor restrictions— Reclassifications out "Net assets without donor restrictions— Reclassifications in" Charitable remainder trust Not applicable Not applicable Charitable gift annuity Not applicable Not applicable Pooled income fund Not applicable Not applicable - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F690A09D-9F73-4495-A19A-82344ED927EE-low.gif) Revaluation of Obligation to Other Beneficiaries Debit Credit Assets Held by a Third Party Charitable lead trust Not applicable Not applicable Charitable remainder trust Not applicable Not applicable Assets Held by the NFP Charitable lead trust Liability for amounts held for others (d) "Change in value of split-interest agreements (a) (d)" Charitable remainder trust Liability under trust agreement (d) "Change in value of split-interest agreements (a) (d)" Charitable gift annuity Annuity payment liability (d) "Change in value of split-interest agreements (a) (d)" Adjustment of Deferred Revenue—including Amortization of Discount and Changes in Life Expectancy Debit Credit Pooled income fund Discount for future interest (deferred revenue) Change in value of split-interest agreements Change in Fair Value of Beneficial Interest Debit Credit Assets Held by a Third Party Charitable lead trust Beneficial interest in lead trust "Change in value of split-interest agreements (a) (d)" Charitable remainder trust Beneficial interest in remainder trust "Change in value of split-interest agreements (a) (d)" Assets Held by the NFP Charitable lead trust Not applicable Not applicable Charitable remainder trust Not applicable Not applicable Charitable gift annuity Not applicable Not applicable Pooled income fund Not applicable Not applicable - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9B3DBAAB-25AA-4B0A-8D7F-D1224894007C-low.gif) Termination of the Trust Debit Credit Credit Assets Held by a Third Party Charitable lead trust Change in value of split-interest agreements (a) Beneficial interest in lead trust Charitable remainder trust "Assets (for example, endowment or other investments)" Beneficial interest in remainder trust Change in value of split-interest agreements (a) (d) Assets Held by the NFP Change in value of split-interest agreements (a) (d) Charitable lead trust Liability for amounts held for others Assets held in charitable lead trust Change in value of split-interest agreements (a) (d) Charitable remainder trust Liability under trust agreement Change in value of split-interest agreements (a) Charitable remainder trust "Assets (for example, endowment or other investments)" Assets held in charitable remainder trust Charitable gift annuity Annuity payment liability Change in value of split-interest agreements (a) Pooled income fund Discount for future interest (deferred revenue) Change in value of split-interest agreements (a) Pooled income fund "Assets (for example, endowment or other investments)" Assets of pooled income fund All Agreements "Additionally, a reclassification may be necessary if net assets are no longer subject to time or purpose restrictions." (a) See Section 958-30-45 for classification of contribution revenue and change in the value of split-interest agreements. (b) Debit and credit could be reversed depending on whether the change in fair value of the assets held under the agreement is a gain or a loss. (c) "Alternatively, the annuity payment liability could be credited, resulting in the netting of investment return with other changes in the value of split-interest agreements." (d) Debit or credit could be reversed depending upon the whether the adjustment increases or decreases the liability.