Subscribe:

Ads 468x60px

When donated services should be recorded in VHWO

Although the range of personal services that volunteers donate varies between VHWOs, these services should be recorded if they are significant and if the following criteria are met:

1. The services received create or enhance nonfinancial assets, or
2. The services received require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. (Usually the individuals performing such services are treated in a similar fashion to employees; they have schedules, assigned duties, are supervised, etc.)

Promises to give services are also included. Recognizing contributed services that are specialized and would need to be purchased indicates to readers of the financial statements the impact these contributions have on the organization. It also indicates the need for future cash outflows in the event these services are no longer contributed.

If the criteria are met, donated services are recorded with a debit to an expense account, such as Salary Expense, and a credit to Contributions. Contributed services received that are not re-quired to be recognized as revenues are disclosed at their fair value in the footnotes to the financial statements.
Related Posts Plugin for WordPress, Blogger...