equity transaction

Industry1

1. 958-20Financially Interrelated Entities958 Not-for-Profit Entities

   ASC 958-20 governs accounting by two NFPs that are "financially interrelated" — one entity can influence the other's operating and financial decisions AND one has an ongoing, residual economic interest in the other's net assets (958-20-15-2). When a donor transfers assets to a recipient entity (e.g., a fundraising foundation) for a financially interrelated specified beneficiary and the recipient is not a trustee, the recipient recognizes contribution revenue on receipt (958-20-25-1) and the beneficiary recognizes an interest in the recipient's net assets, adjusted for its share of changes in those net assets in a manner similar to the equity method (958-20-25-2; 35-1). Transfers in which the resource provider names itself or an affiliate as beneficiary and expects no repayment are "equity transactions" reported as a separate line in the statement of activities (958-20-25-4; 45-1).