This ASU was issued to address concerns about the lack of transparency in the financial statements regarding the amount of gifts-in-kind (GIK) received and used in an entity’s operation or monetized. This revised guidance does not change the accounting treatment or the valuation of the of a GIK. It requires more prominent presentation of contributed nonfinancial assets and enhance disclosures regarding valuation and use of the assets.
GIK’s are contributed nonfinancial assets donations of goods or services that an organization would purchase in the normal course of operations. GIK’s of tangible property include items like operating facilities, including free or below market rent, utilities, office furniture, and supplies provided to an organization; items donated to an organization to be auctioned through your charitable events; and items used in program activities, such as pharmaceuticals, medical supplies, building supplies, appliances, and fixtures. Intangible gifts-in-kind include items like copyrights, patents, and royalties; specialized volunteer services (those that create or enhance nonfinancial assets or require specialized skills), such as those from doctors and nurses for medical organizations, project managers and builders for construction projects, and expertise, such as accounting and legal services.
The key provisions of the new standard are as follows:
The effective date this ASU is for years beginning after June 15, 2021, and interim periods within years beginning after June 15, 2022. This ASU is required to be applied on a retrospective basis. Early adoption is permitted.