AFAR-non Profit
AFAR-non Profit
AFAR-non Profit
Valdez
Cash and other Non-cash assets
Recognized as revenues in the period received and as assets, decreases of
liabilities, or expenses depending on the form of the benefits received.
Measured at fair value at the date of contribution and are reported as either:
a. Unrestricted support- revenue from unrestricted contributions.
b. Restricted support- revenue from temporarily restricted or permanently
restricted contributions.
Available for immediate use and for any purpose.
Example:
A non-profit organization receives cash of P200,000 and land with Fair Value of
P1,000,000 to be used at the entity’s discretion.
Journal entry:
Cash 200,000
Land 1,000,000
Contribution Revenue- 1,200,000
unrestricted support
Revenue from:
a. Temporarily restricted- restricted by donor in such a way that the availability of the
contribution for the NPO’s use is dependent upon the performance of a specific
task, the happening of a future event, or the passage of time.
b. Permanently restricted- restricted by donor in such a way that the organization will
never be able to use the contribution itself; however, the organization may be able
to use the income therefrom.
Example:
On January 1, 2019, Entity A, a non-profit organization received the following
donations from a Korean star named Park Ray Mart:
Cash of P12,000,000 to be used to acquire a truck. The truck will be used in Entity A’s
outreach programs.
Investment in equity securities with fair value of P500,000 to be held indefinitely. Only the
investment income shall be used by Entity A in its operations.
• On December 31,2019, Entity A acquired a truck for 12,000,000 and received cash dividends of
P60,000 from the equity securities.
Journal Entries:
Example: On January 1,2019, Entity A received a formal promise from Raymart-san to donate P1,000,000.
Note: When the effect of time value of money is material, receivables shall be measured at present value.
Recognized when the attached conditions are substantially met.
Considered as unconditional when the possibility that the conditions will be met is
reasonably certain.
A transfer of assets with a conditional promise to contribute them shall be
accounted for as a refundable advance (liability) until the conditions have been
substantially met.
Example: (refer to previous example) The donation is conditioned on the
submission of a detailed formal plan for a proposed project. As of January 1,2019,
the plan is not yet substantially complete.
No entry
Contributed services and promises to give service that do not meet those criteria are
not recognized
Example:
Wampipty, a non-profit organization, received the following services:
a. Carpenters repaired the ceiling of Wampipty’s office for free. The
fair value of the service is P1,000,000
b. JPIA members from various universities helped in a tree-planting
activity initiated by Wampipty for free. The fair value of the
services might be P150.
The NPO acquired a truck for P2M on Jan. 1,2020. The truck will be depreciated over a 10-year useful life
using straight-line method.
Jan. 1,2020 Transportation Equipment-Truck 2,000,000
Cash 2,000,000
Dec. 31,2020 Depreciation Expense 200,000
Accumulated Depreciation 200,000
Deferred Revenue 200,000
Contributions Revenue 200,000
1. Statement of Financial Position- shows information on assets, liabilities, and net
assets.
SFAS No. 117 requires reporting of net assets in the SOFP according to the following
classifications:
a. Unrestricted net assets
b. Temporarily restricted net assets
c. Permanently restricted net assets
(PFRS-based FS may present net assets using these classifications either on the
Statement of Financial Position or in the notes)
2. Statement of Activities- shows information on revenues, expenses, and changes
in net assets for a period.
SFAS No. 117 requires that the statement of activities report the changes in net
assets for each of the 3 categories of support separately.
In a statement of activities, the term “profit” or “net income” is replaced by the term
“change in net assets”.
Expenses are reported as decreases in unrestricted net assets.
SFAS No.117 requires expenses to be presented in the SOA or in the notes
according to their function.
a. Program Services- Major purpose and the major output of the organization
b. Supporting activities- activities other than program services. Generally, these
include management and general expenses, fund-raising, and membership-
development activities.
3. Statement of Cash Flows
4. Notes