Final answer:
It is true that material donated services should be recorded as contributions by a nongovernmental, not-for-profit organization if they meet the recognition criteria set out by FASB. These services must either enhance a non-financial asset or require specialized skills that are typically paid for if not donated.
Step-by-step explanation:
The question pertains to accounting practices for nongovernmental, not-for-profit organizations (NGOs), specifically regarding the recording of donated services. According to the Financial Accounting Standards Board (FASB) standards, it is true that donated services should be recorded as contributions if they are material in nature and meet the specified recognition criteria. For services to be recognized, they must either enhance a non-financial asset or require specialized skills, be provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Examples of these would be legal, accounting, or architectural services provided free of charge to the organization.
Many NGOs, like the Red Cross and World Wildlife Fund, receive such donated services that are crucial to their operations, especially during times of emergent need such as natural disasters or wars. These services contribute significantly to their capability to provide aid and are accounted for as part of their financial statements. It's critical for NGOs to acknowledge these donations properly in order to maintain transparency and accuracy in their financial reporting.