Question

A donation of land, building or equipment to a not-for-profit organization is recorded at:

A) Fair value.
B) Estimated cost.
C) Depreciated cost.
D) Original cost to the donor.

Answer 1

Donations to a not-for-profit organization are recorded at the fair value at the time of the donation, in accordance with GAAP.

Step-by-step explanation:

When a donation of land, building, or equipment is made to a not-for-profit organization, it is recorded at fair value. This accounting practice aligns with Generally Accepted Accounting Principles (GAAP) which state that contributions received should be recorded at their fair value at the time of the donation. Fair value is a measure that reflects the 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.