Recognition and measurement

Cash and other non-cash assets received as contributions are recognized as revenues in the period
received as assets, decreases of liabilities, or expenses depending on the form of the benefits received.

Contributions are measured at fair value at the date of contribution and reported as either:

1. Unrestricted Support
2. Restricted support

Illustration 1 Unrestricted support

A non profit organization receives cash of P500,000 and land with value of P1,500,000 to be used at the
entity’s discretion.

Journal Entry
Cash 500,000
Land 1,500,000
Contributions Revenue – unrestricted support 2,000,000

Illustrations 2- Restricted Fund

Entity B Non-profit organization received the following donations on June 1, 2022

Cash, Restricted for the acquisition of equipment for special project 200,000
Securities, at market value for permanent endowment of special project
(any income earned on the securities is restricted to use for the special project) 400,000

On July 1, 2022, the nonprofit organization paid 150,000 for the equipment and received dividend
income from the securities amounting to 20,000.

Restricted Fund
June 1 Cash 200,000
Contributions Revenue-temporarily restricted support 200,000

Investment in Equity Securities 400,000

Contributions Revenue-permanently restricted support 400,000
To record the receipt of permanently restricted donations

July 1 Net Assets released from restrictions 150,000

Cash 150,000
To record the funds released from temporary restriction

Cash 20,000
Dividend Income 20,000