A non-profit organisation based in Virginia, USA was donated part of
real estate’s value.Currently the real estate is being adminstered by
an agent.I would appreciate if any one could hint me what both IFRS
and USGAAP recommends for treating such transaction.
When you say value, I assume a cash donation was made to buy the
property. Is the property been transferred in the name of this
organization. If it has, this means that risks and rewards of
ownership have been trasferred.
I would assume, IAS 20, Grant accounting rules will need to be followed.
The amount of grant is recognized as revenue in proportion to the
incurrence of expenses that these grants are expected to cover. If
grant is given so that a particular structure can be erected on the
land, the grant is amortized into revenue over the useful life of that
structure, for instance a hospital. If this is the case, the grant
should be shown as deferred income, a liability account, until such
time that hospital is ready and comes into operation. From that period
onwards, it should be amortized over the useful life of this hospital.
If it appears that the grant might have to be repaid after some time
because of, for instance, non compliance with the conditions that were
attached with the grant, a provision should be created in the balance
I hope this helps.
I think the right accounting literature under US GAAP should be SFAS
116 Accounting for Contributions Received and Contributions Made; IFRS
doesn’t have any literature related to contributions or non-for-profit
Hai AllI am talking in general why can we take this way1.Bank/Cash Dr
To Donation (Income Account )2.Donation Dr (Income Account )
To Deffered Income Cr3.Assets Purchased Dr
To Defferred Income CrBalance of assets purchased will be transferred to Income for the year.Let me knowRegardsRajesh