net assets without donor restrictions

ASC 958-205 governs the presentation of a not-for-profit entity's general-purpose financial statements. A complete set consists of a statement of financial position, a statement of activities, a statement of cash flows, and notes (958-205-45-4), with net assets classified in two minimum classes—net assets with donor restrictions and net assets without donor restrictions (958-205-45-2(b)). It also prescribes when donor restrictions expire, how endowment funds (including those under UPMIFA) are classified, and the required endowment and underwater endowment disclosures.

This subtopic governs how health care entities, including not-for-profit business-oriented health care entities, present their balance sheets. The general rule is a classified (current/noncurrent) balance sheet under Section 210-10-45, except that a continuing care retirement community may instead sequence assets by nearness of conversion to cash and liabilities by nearness of maturity. It also specifies that contractually limited (non-donor) assets stay in net assets without donor restrictions, that interfund balances are eliminated, and that restricted or segregated cash is excluded from current assets.

This subtopic governs the not-for-profit statement of financial position (the NFP equivalent of a balance sheet). At a minimum the statement must report totals for assets, liabilities, net assets, net assets with donor restrictions, and net assets without donor restrictions, focusing on the entity as a whole (958-210-45-1). It also requires liquidity-related presentation and disclosure, including qualitative information about how the NFP manages liquid resources and quantitative information about financial assets available for general expenditures within one year (958-210-50-1A).

This Subtopic governs how not-for-profit, business-oriented health care entities present their statement of operations and statement of changes in net assets. Its central requirement is a clearly labeled "performance indicator" (e.g., revenues over expenses) reported in a statement that also shows total changes in net assets without donor restrictions, with a specified list of items — such as equity transfers, donor-restricted contributions, other comprehensive income items, and unrealized gains/losses on non-trading debt securities — required to be reported outside that indicator.

ASC 220-958 governs the not-for-profit statement of activities — the NFP substitute for a business entity's income statement. It requires the statement to focus on the entity as a whole and report the change in total net assets, the change in net assets with donor restrictions, and the change in net assets without donor restrictions, with revenues, expenses, gains, losses, and reclassifications classified among those net asset classes. It addresses how to report these elements (including gross versus net display, investment return net of investment expenses, and optional intermediate measures of operations), but not when to recognize or how to measure them.

This Subtopic adapts Topic 715 (pension and other postretirement benefits) for not-for-profit entities, which do not report other comprehensive income. Everywhere Topic 715 would require net gains or losses, prior service costs or credits, and transition assets or obligations to run through OCI/AOCI, an NFP instead recognizes those amounts as changes in net assets without donor restrictions that have not yet been reclassified into net periodic benefit cost. Those amounts, and the non-service components of net periodic benefit cost, are presented in separate line items outside any intermediate measure of operations (or performance indicator for business-oriented health care NFPs).