Donated Capital Asset

Governmental funds normally do not report capital assets or donated capital assets. If a
school district intends to sell rather to keep donated capital assets, revenues may be
reported if either of the following conditions is met:

a. the asset is sold prior to the end of the fiscal year, and the proceeds of the sale
are available;
b. or the asset is sold (or the district has entered into a contract to sell the asset)
prior to the issuance of the financial statements, and the proceeds of the sale
are considered available.

If the proceeds of the sale are not considered available, a receivable and a liability for
deferred revenue would be recognized in the appropriate governmental fund only at the
time the district finally entered into a sales contract. Otherwise, the donated asset should
be treated like a capital asset used in the government’s operations until a sale occurs.

Example 1: An used vehicle is donated to school district XYZ which sold it for $10,000.
The sale occurred before August 31. Below are the appropriated journal entries in
governmental fund:

Debit Credit
General
Ledger
Account

240 Cash on Deposit with County $10,000

960 Revenue-Sales of donated vehicle $10,000

Example 2: School district XYZ signed an agreement with its buyer to sell a donated
building prior to issuance of its financial statements. The estimated sales price was
$100,000. Below are the appropriate journal entries:

Debit Credit

340 Accounts Receivable $100,000

750 Deferred Revenue – Sales of Bldg $100,000

When building is sold:

240 Cash on Deposit with County $100,000

960 Revenue-Sales of donated Building $100,000

750 Deferred Revenue – Sales of Bldg $100,000

340 Accounts Receivable $100,000

Donated Assets (not Capital Assets)

(Voluntary Nonexchange Transactions)
Private companies and/or individuals might donate cash or assets (not capital assets) to
school districts, the recognition of revenue or deferred revenue and expenditure is
required when all eligibility requirements are met or when there are no eligibility
requirements. If the donation is announced in advance and the school district believes
that the collection is probable, the school district should recognize a receivable and a
revenue. Eligibility requirements means conditions or criteria and time period imposed by
donors.

Example 3: A private individual donated $5,000 cash to a school district to be used at

any time, and for any purposes deemed appropriate by the school district. The following
journal entries should be recorded:

General
Ledger
Account Debit Credit

240 Cash on Deposit with County $5,000

960 Revenue – Donations
$5,000

If the donor announces a year before paying it and the collection is probable, the district
should recognize a receivable and a deferred revenue when the donation is announced, as
follows:

Debit Credit

340 Accounts Receivable – Donor $5,000

750 Deferred Revenue – Donations $5,000

When Cash is Received:

240 Cash on Deposit with County $5,000

960 Revenue – Donations $5,000

750 Deferred Revenue – Donations $5,000

340 Accounts Receivable – Donor $5,000

Example 4: A private individual donated supplies worth $2,000 to a school district to be

used at any time and for any purposes deemed appropriate by the school district. Below
are the appropriate journal entries:

Debit Credit

Expenditures – Donated Supplies $2,000

Revenues – Donated Supplies $2,000
Donated Services

Payments of salaries and benefits made on behalf of the district’s employees for services
rendered to the district, are required to record as revenues and expenditures/expense in the
fund receiving the services.

The Governmental Accounting, Auditing, and Financial Reporting (GAAFR)

recommended that school districts follow FASB statement No.116 for donated services
by volunteers, because GAAP is silent on this issue.

Per FASB statement No. 116, the recognition of revenue and expense is limited to those
services that meet one or the other of the following criteria:

 the donated service creates or enhances nonfinancial assets (e.g.,

volunteers improvements to a capital asset); or
 the donated service requires specialized skills, and is provided by
individuals possessing those skills, and would typically need to be
purchased if not provided by donation (examples: accountants, architects,
doctors, lawyers, etc.)

Example 5: Company ABC agrees to provide one half of a school district’s bookkeeper
for total amount of $15,000. Below are the appropriate journal entries:

General
Ledger
Account Debit Credit

530 Expenditures – Donated Sal./Ben. $15,000

960 Revenue – Donated Sal./Ben. $15,000

Example 6: An accountant from a private company donates his/her time to work on

setting up Medicaid Administrative Match billings. The total time spent on the project
was 15 hours. For that type of work, the market rate is $40 per hour. Below are the
appropriate journal entries ($40 x 15 hours = $600):

Debit Credit

530 Expenditures – Donated Services $600

960 Revenue – Donated Services $600