Two nonprofit accounting questions - non-cash donations and fixed assets


B

Bill

I am updating the accounting records of a 4 year old church.
Regarding non-cash donations, the giver's account is credited, but
should the debit be to the nature of the gift? Example, paper or
pens, to office supplies? Or, cost of a cell phone, to phone expense?
These items are in a temporary asset account right now.

On fixed assets, I'm capitalizing items like chairs and tables, etc.
I want to have a $ 500 minimum on these items, except when we buy so
many. But an item like musical bells for just under $500, I hesitate
to capitalize these, but I also don't want to have a policy then have
a number of exceptions to it. Television under $500 or DVD players,
VCR's, expense. Anyone have a good benchmark I'm missing here?

Thanks for your help!!
 
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C

Chris Luper

I am updating the accounting records of a 4 year old church.
Regarding non-cash donations, the giver's account is credited, but
should the debit be to the nature of the gift? Example, paper or
pens, to office supplies? Or, cost of a cell phone, to phone expense?
These items are in a temporary asset account right now.
paper and pens: office expense.

cost of cell phone: should be a prepaid until phone time is used, at which
point it is phone expense.
On fixed assets, I'm capitalizing items like chairs and tables, etc.
I want to have a $ 500 minimum on these items, except when we buy so
many. But an item like musical bells for just under $500, I hesitate
to capitalize these, but I also don't want to have a policy then have
a number of exceptions to it. Television under $500 or DVD players,
VCR's, expense. Anyone have a good benchmark I'm missing here?
It really depends on the size of the non-profit what your materiality
considerations should be, but I would have a hard time expensing the purchase
of a television.
 
J

Janice Davis

Chris Luper said:
paper and pens: office expense.
How is this an expense if these items are donated?
cost of cell phone: should be a prepaid until phone time is used, at which
point it is phone expense.
Again I think this cell phone is a donated item. At least that is the way
Bill stated it.
 
B

Bill

Janice Davis said:
How is this an expense if these items are donated?


Again I think this cell phone is a donated item. At least that is the way
Bill stated it.
In my way of thinking, the expense offsets the credit to the giver's
record (and is income to the church.)
At year end, I'll reclass these items to the appropriate expense or
asset accounts.

I'll capitalize the tv's for three years, I agree.
 
B

Bill Lentz

How is this an expense if these items are donated?
Not for profits frequently record donated goods and services as an "In
and Out" transaction
 
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A

Ab

The entry is a debit to an expense or asset and a credit to revenue.
Donated revenue and expense are reported in two lines and they show
the sam balance.

Hope this helps
Ab
 
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