FASB Update: Services Received from Personnel of an Affiliate
May 22, 2014
By Brian Collins, CPA
In early 2013, the Financial Accounting Standards Board (FASB) issued an Account Standards Update titled Services Received from Personnel of an Affiliate that amends revenue recognition guidance for not-for-profits (Topic 958, Not-for-Profit Entities, Section 605, and Revenue Recognition). The new guidance now requires that services contributed to not-for-profit entities be recognized at fair value if employees of separately governed affiliated entities regularly perform services for and under the direction of the recipient of the services. The guidance also indicates that those contributed services should be recognized only if they create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills, and typically would need to be purchased if not provided by donation. Those services should be measured at the cost recognized by the affiliate for the personnel providing those services.
The Update is effective for fiscal years beginning after June 15, 2014, and early adoption is permitted.