Property, Plant, And Equipment For Profit Entities

1212 Words Apr 22nd, 2016 5 Pages
Property, Plant, and Equipment for Not-for-Profit Entities
Introduction
Not-for-Profit entities differ from for profit entities in many ways. These differences are often in direct relation to core organizational differences (such as purpose and profit distribution). This is evident in the Statement of Financial Position that is issued by not-for-profit organizations. Not-for-profit entities are perfectly capable of purchasing assets and these assets are accounted for very similarly to assets purchased by a for-profit firm. However, the ability to accept contributed assets creates additional intricacies in the Property, Plant, and Equipment line item on the Statement of Financial Position. Not-for-profits are also affected by the choice to omit fixed assets that qualify as “collections” from the Balance Sheet. The accounting policies, disclosures, and classifications of fixed assets for not-for-profits are affected by the ability to receive contributed assets and acquire “collections”. The following sections will provide an introduction to how accounting is regulated for contributions and “collections.” The introduction will be complimented with examples of how fixed assets are classified on the financial statements of Millersville University.
Recognition
One of the major differences between PP&E for not-for-profit entities, when compared to for-profit entities, is that the PP&E for a not-for-profit can be acquired through contribution. These contributions must be valued in…
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