Under current U.S. GAAP, assets that have been donated to a company are recorded at fair...

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Accounting

Under current U.S. GAAP, assets that have been donated to acompany are recorded at fair value. By basing your argument on theconceptual framework, argue in favor of the current GAAP treatmentfor donated assets.

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When donations are given to an organization usually a nonprofit entity those donations have a worth and must be counted as an asset for that company The value of assets that have been donated is normally based on what those assets would cost if purchased or their market value It is important that organizations are aware of how to post these contributions in their financial books because the assets of nonprofit organizations come under more scrutiny by the Internal Revenue Service than do other organizations Understand the definition of fair market value In the case of donated assets fair market value is defined asthe price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date according to generally accepted accounting principles GAAP1 Basically this means that you should record any donated assets for the value that they would fetch if you turned around and sold them immediately This is also referred to as the exit price Research the market to determine the exit price In the past nonprofits depended on the donor to specify a value for the donated asset However modern accounting See Answer

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Under current U.S. GAAP, assets that have been donated to a company are recorded at fair...

60.1K

Verified Solution

Question

Accounting

Under current U.S. GAAP, assets that have been donated to acompany are recorded at fair value. By basing your argument on theconceptual framework, argue in favor of the current GAAP treatmentfor donated assets.

Answer & Explanation Solved by verified expert

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