Question

This problem requires you to research the disclosure requirements for fixed assets using the FASB Codification at www.fasb.org. Access to the FASB Codification requires that your educational institution be enrolled in the FASB academic access program or provides access through a third-party provider. a. Identify the section in the FASB Codification that addresses property, plant and equipment, and the sub- section that provides disclosure requirements b. Indicate the disclosures for fixed assets that should be made in the financial statements or footnotes to the statements. c. The section on disclosure also includes requirements for impairment or disposal of long-lived assets. What is the definition of impairment. (Hover your cursor over the highlighted term to see the glossary definition). d. Identify the information that must be disclosed in the notes to the financial statements for the period in which an impairment loss is recognized.

Answer 1

The amount reclassified may or may not be equal to the amount of the related depreciation. The amount to be reclassified shall be based on the length of time indicated by the donor-imposed restrictions while the amount of depreciation shall be based on the useful economic life of the asset. For example, a computer with an estimated useful economic life of five years may be contributed by a donor and restricted for a specific use by the NFP for three years.

The following contributions shall be reclassified from net assets with donor restrictions to net assets without donor restrictions when the acquired or constructed property, plant, or equipment is placed in service:
a. Purpose-restricted contributions of property, plant, or equipment that are without donor-imposed stipulations specifying how long the donated asset must be used
b. Contributions of cash restricted for the acquisition or construction of property, plant, or equipment.
The entire amount of the contribution of property, plant, or equipment or cash shall be reclassified at the time the asset is placed in service. There may be circumstances in which a donor restriction might extend beyond the point at which the property, plant, or equipment is placed in service. For example, a donor might specify that a donation restricted for the acquisition of property, plant, or equipment must continue to be used for a specified period of time. In such circumstances, the restriction would expire over the period of time that the asset is to be used.

An NFP that does not recognize and capitalize its collections shall report all of the following on the face of its statement of activities, separately from revenues, expenses, gains, and losses:
a. Costs of collection items purchased as a decrease in the appropriate class of net assets
b. Proceeds from sale of collection items as an increase in the appropriate class of net assets
c. Proceeds from insurance recoveries of lost or destroyed collection items as an increase in the appropriate class of net assets.
Similarly, an entity that capitalizes its collections prospectively shall report proceeds from sales and insurance recoveries of items not previously capitalized separately from revenues, expenses, gains, and losses.

If the property, plant, and equipment item being depreciated was contributed to the not-for-profit entity (NFP) with a donor-imposed restriction on the item's use, temporarily restricted net assets shall, over time, be reclassified as unrestricted net assets in a statement of activities as those restrictions expire. (For how to report a reclassification, see paragraph 958-220-45-3.) The amount reclassified may or may not be equal to the amount of the related depreciation. The amount to be reclassified shall be based on the length of time indicated by the donor-imposed restrictions while the amount of depreciation shall be based on the useful economic life of the asset. For example, a computer with an estimated useful economic life of five years may be contributed by a donor and restricted for a specific use by the NFP for three years.