What is Unconditional promise to give?
In short
An unconditional promise to give is a pledge with no barrier the not-for-profit must overcome. The recipient recognizes a receivable and contribution revenue when the promise is made, measured at fair value.
Key takeaways
- Amounts due in future years are discounted to present value and have an implied time restriction.
- An allowance is recorded for pledges expected to be uncollectible.
- Promises with conditions aren't recognized until the conditions are met.
Where it's tested
FAR: Not-for-Profit Accounting — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A not-for-profit receives an unconditional pledge of $100,000 to be collected in two years. The present value of the pledge is $90,000. What contribution revenue is recognized when the pledge is received?