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This Subsection provides initial measurement guidance for contributions received, including the following types of contributions:

a
Unconditional promises to give
b
Inventory items
c
Contributed services
d
Gifts in kind.

Contributions received shall be measured at their fair values. Topic 820 establishes a framework for measuring fair value. See the Fair Value Option Subsections of Subtopic 825-10 for guidance about electing at initial recognition to subsequently measure financial instruments and certain other contracts at fair value.

Paragraph 820-10-35-2B states that a fair value measurement takes into account the effect of a restriction on the sale or use of an asset if market participants would take into account the effect of the restriction when pricing the asset. Example 6 (see paragraph 820-10-55-51) illustrates that restrictions that are a characteristic of an asset, and, therefore, would transfer to a market participant, are the only restrictions reflected in fair value. Donor restrictions that are specific to the donee are reflected in the classification of net assets, not in the measurement of fair value.

If present value techniques are used to measure the fair value of unconditional promises to give, the entity shall determine the amount and timing of the future cash flows of unconditional promises to give cash (or, for promises to give noncash assets, the quantity and nature of assets expected to be received). In making that determination, the entity shall consider all the elements in paragraph 820-10-55-5, including the following:

a
When the receivable is expected to be collected
b
The creditworthiness of the other parties
c
The entity's past collection experience
d
The entity's policies concerning the enforcement of promises to give
e
Expectations about possible variations in the amount or timing of the cash flows (that is, the uncertainty inherent in the cash flows)
f
Other factors concerning the receivable's collectibility.

If present value techniques are used to measure fair value, the present value of unconditional promises to give should be measured using a discount rate that is consistent with the general principles for present value measurement discussed in paragraphs

820-10-55-5 through 55-9

. In conformity with paragraph 835-30-25-11, the discount rate shall be determined at the time the unconditional promise to give is initially recognized and shall not be revised subsequently unless the entity has elected to measure the promise to give at fair value in conformity with the Fair Value Option Subsections of Subtopic 825-10.

Unconditional promises to give that are expected to be collected in less than one year may be measured at net realizable value because that amount results in a reasonable estimate of fair value.

If a promise to give has not previously been recognized as contribution revenue because it was conditional, fair value shall be measured when the conditions are met.

A present value technique is one valuation technique for measuring the fair value of an unconditional promise to give noncash assets; other valuation techniques also are available, as described in Topic 820. If present value techniques are used, the fair value of contributions arising from unconditional promises to give noncash assets might be determined based on the present value of the projected fair value of the underlying noncash assets at the date that those assets are expected to be received (that projected fair value is referred to in this Section as the future fair value) and in the quantities that those assets are expected to be received, if the date is one year or more after the financial statement date. Both the likelihood of the promise being fulfilled and the future fair value of those underlying assets, such as the future fair value per share of a promised equity security, should be considered in determining the future amount to be discounted. The quantity, nature, and timing of assets expected to be received, such as the number of shares of a promised equity security, the entity in which those shares represent an equity interest, and when those shares will be received should be considered in determining the likelihood of the promise being fulfilled. In cases in which the future fair value of the underlying asset is difficult to determine, the fair value of an unconditional promise to give noncash assets may be based on the fair value of the underlying asset at the date of initial recognition. No discount for the time value of money shall be reported if an asset's fair value at the date of initial recognition is used to measure the fair value of the contribution.

Inputs for measuring fair value of contributed inventory items may be obtained from published catalogs, vendors, independent appraisals, and other sources. If methods such as estimates, averages, or computational approximations, such as average value per pound or subsequent sales, can reduce the cost of measuring the fair value of inventory, use of those methods is appropriate, provided the methods are applied consistently, and the results of applying those methods are reasonably expected not to be materially different from the results of a detailed measurement of the fair value of contributed inventory.

Contributions of services that create or enhance nonfinancial assets may be measured by referring to either the fair value of the services received or the fair value of the asset or of the asset enhancement resulting from the services. Fair value should be used for the measure regardless of whether the NFP could afford to purchase the services at their fair value.

Gifts in kind that can be used or sold shall be measured at fair value. In determining fair value, entities should consider the quality and quantity of the gifts, as well as any applicable discounts that would have been received by the entity, including discounts based on that quantity if the assets had been acquired in exchange transactions. Fair value would generally not increase when a gift in kind is passed from one entity to another. However, fair value could increase if an entity adds value to the gift, such as by cleaning and packaging the gift. Any increases should be evaluated to determine whether the entity did, in fact, add to the fair value of the assets.

Both the liability and the assets shall be measured at the fair value of the assets received from the donor.

If the beneficiary has an unconditional right to receive all or a portion of the specified cash flows from a charitable trust or other identifiable pool of assets, the beneficiary shall measure that beneficial interest at fair value. The fair value of a perpetual trust held by a third party generally can be measured using the fair value of the assets contributed to the trust, unless facts and circumstances indicate that the fair value of the beneficial interest differs from the fair value of the assets contributed to the trust. If the beneficiary recognizes a receivable pursuant to paragraph 958-605-25-30, the beneficiary shall measure its rights to the assets held by a recipient entity at fair value in accordance with paragraph 958-605-30-2 and paragraphs

958-605-30-4 through 30-7

for unconditional promises to give.

Text as published in the FASB Accounting Standards Codification, Basic View.