Donated Fixed Asset PDF

Sign In Pricing FAQ
Search our website...
ACCOUNTING ACCOUNTING ACCOUNTING ACCOUNTING MY Join Now

TUTORIALS ARTICLES TESTS DICTIONARY STUDYBOARD
Accounting for donated fixed assets
March 8, 2013 Share Tweet
Fixed asset donations are rare when one talks about for-profit companies, but such donations are
more common when one talks about non-for-profit companies. Fixed asset donations can be inbound Lecture Contents:
or outbound. How does a company account for such donations?
1. Two types of fixed asset donation

1. Two types of fixed asset donation 2. Example of an inbound fixed asset
donation
Asset donation is a nonreciprocal transfer of an asset because it is a transfer of an asset in one direction. 3. Example of an outbound fixed asset
Assets donations can be inbound and outbound. donation
Get 4%
Plus cash
Take
apurchases
rebate back on annual
advantage
on your all of this
You
your deserve more from
for your
fee
yourincredit
thelimited-time
first
card.year. offer.
first 4 statements.*
*Conditions apply.
Banking
that fits
your life. Free Study Notes
Download free accounting study notes by

Inbound fixed asset donations take place when a fixed asset is donated to a company (e.g., a non-for- signing up for our free newsletter
profit). The company should record the received asset at its fair market value, which can be determined (example):
through an appraisal, the market rate on similar assets, or the net present value of the expected future cash
flows generated by the asset. First Name:
The company can record the donated asset by:

E-mail:
Debiting a fixed asset account (at fair market value), and
Crediting contribution revenue
Newsletter Sign Up
Similarly, an outbound fixed asset donation is when a company donates a fixed asset. In this case, the
company recognizes the fair value of the donated asset, net of its book value. The company recognizes an
expense for the fair value of the donated asset (e.g., Dr. Charitable Donations; Dr. Contribution Expense). If We never share or sell your e-mail to third
the fair value does not equal the asset net book value, the company will recognize either a gain or loss. If the parties.
fair value is above the net book value, the company will record a gain; on the other hand, if the fair value is
below the net book value, the firm will recognize a loss on the fixed asset donation.
2. Example of an inbound fixed asset donation

Ask a Question
Suggest a Topic
Get 4%
Plus cash
Take
apurchases
advantage
on your all of this
You
for your
fee
yourincredit
thelimited-time
first
card.year. offer. Do you have an interesting question or
Banking
that fits
*Conditions apply. your life.
topic?
Suggest it to be answered on
Simplestudies.com:
Let’s assume that Private-Donor Company donated a building to ABC Company with a net book value of
$200,000 ($400,000 historical cost - $200,000 accumulated depreciation). The fair market value of the
building is $225,000. ABC Company should recognize contribution revenue. Ask Question
Account Titles Debit Credit
Building $225,000
Contribution Revenue $225,000
3. Example of an outbound fixed asset donation
Let’s continue with the example and assume that Private-Donor Company donated a building to ABC
Company with a net book value of $200,000 ($400,000 historical cost - $200,000 accumulated depreciation).
The fair market value of the building is $225,000. To record the donation of the building, Private-Donor
Company would make the following journal entry:

Charitable Donations $225,000
Accumulated Depreciation $200,000
Building $400,000
Gain on Property Donation $25,000
Get 4%
Plus cash
Take
apurchases
advantage
on your all of this
You
for your
fee
yourincredit
thelimited-time
first
card.year. offer.
Banking
that fits
*Conditions apply. your life.
In this example, because the fair market value of the building is above its net book value, the donating
company recognized a gain on the property donation. If the market value was below the net book value, the
company would recognize a loss.
For instance, let’s assume that Private-Donor Company donated land to XYZ Company worth $100,000.
Land is recorded in the books at $120,000. Private-Donor Company would recognize a loss on the donation:

Charitable Donations $100,000
Loss on Land Donation $20,000
Land $120,000
In both examples, the company recorded the donation at the fair market value in the Charitable Donations
account. These transactions could be recorded in the Contribution Expense account. In any case, the
donation should be reported as an expense (i.e., debited) in the income statement.
Related accounting material
Accounting for Long-term Assets

How to account for an increase in the useful life of a fixed asset
How to estimate the useful life of a fixed asset
Accounting for self-constructed fixed assets
What is the impact of not depreciating fixed assets?
Not a member?
See why people join our
online accounting course:
About Us Contact Us Privacy Policy Disclaimer Site Map Links Copyright Terms of Service Facebook Twitter RSS
Copyright © Simplestudies LLC 2004-2016. All rights reserved

Donated Fixed Asset PDF

Uploaded by

Copyright:

Available Formats

Donated Fixed Asset PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Donated Fixed Asset PDF

Uploaded by

Copyright:

Available Formats

Sign In Pricing FAQ

Search our website...

ACCOUNTING ACCOUNTING ACCOUNTING ACCOUNTING MY Join Now

Accounting for donated fixed assets

March 8, 2013 Share Tweet

1. Two types of fixed asset donation

Download free accounting study notes by

The company can record the donated asset by:

2. Example of an inbound fixed asset donation

Account Titles Debit Credit

Account Titles Debit Credit

Related accounting material

Accounting for Long-term Assets

You might also like