Property, Plant, And Equipment For Profit Entities

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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…show more content…
In ASC 958-605 states that “contributions received” are to be recognized in the period received. This is relatively intuitive, but causes concern when related to items with unidentifiable value. The FASB states that contributions have no value unless they can be “used internally by the not-for-profit entity” or “sold by the NFP” (FASB, 2015). Items that do not fall under these two categories have no value and should not be recognized. If the not-for-profit decides to accept these gifts, they will often classify the items as collections. Depreciation and Impairment Depreciation is required for assets with future economic benefit or service potential by FASB. This does not include land used as a building site or historical treasures. Historical treasures are defined as assets with historical value that is preserved perpetually or assets with service potential that the NFP has the ability to protect (and is currently protecting). Fixed assets such as office equipment, building for operations, etc. are depreciated over the useful life. For example, Millersville University depreciates their laboratory and audio/visual equipment over a useful life of 7 years (Millersville University, 2015). These assets are also subject to impairment-testing. Disclosure Not-for-profit entities are required to classify their Property, Plant, and Equipment assets into 3 different categories. These assets can be defined as non-depreciable assets, property
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