Question

The FASB requires that support from special events, if related to the central ongoing and major activities of the organization, and related direct costs, be reported at their gross amounts in the statement of activities.

Option 1: Support from special events should not be reported in the statement of activities
Option 2: Support from special events should be reported as a single line item in the statement of activities
Option 3: Support from special events should be reported net of related direct costs (Correct Option)
Option 4: Support from special events should be reported as an offset against liabilities

Answer 1

The FASB requires that 3) support from special events if related to the central ongoing and major activities of the organization, and related direct costs, be reported at their gross amounts in the statement of activities.

Step-by-step explanation:

The correct option is Option 3: Support from special events should be reported net of related direct costs. When reporting support from special events in the statement of activities, if it is related to the central ongoing and major activities of the organization, the Financial Accounting Standards Board (FASB) requires that it be reported at its gross amount. This means that the support and the related direct costs should be reported separately. For example, if an organization holds a fundraising gala where attendees purchase tickets and make additional donations, the ticket sales and donations would be reported as separate line items in the statement of activities, and the direct costs associated with organizing the gala would be deducted from the support received, resulting in a net amount reported.