Split Interest Agreement Accounting

The wide range of tax and temporal implications associated with charitable giving has led to the creation of a large number of donation types and structures. And of course, there are a plethora of accounting implications that you need to keep in mind if you are responsible for financial reporting of your type of utility. An agreement that can be particularly demanding and therefore can be understood is the split-interest agreement. You may be wondering if there will be any new disclosures that will be required according to LE 81, and the good news is that there are none! Gasb believes that: that current standards cover all the essential aspects of common interest agreements, including GASB 72, Fair Value Measurement and Application for Investments, GASB 34, Basic Financial Statements – management`s Discussion and Analysis – for public and local governments, commitments (only so significant/essential) and GASB 63, financial reports on latent resource flows, latent resource flows and latent resource flows. The use of the concept of liability in this issue does not mean whether the commitment is a responsibility or a form of minority participation. There are criteria where the beneficial interests of trusts should be recognized by the government. In most cases, all of these criteria are often found in these types of transactions when a third party is the intermediary. All the following criteria must be met to register an advantage: The standard also covers situations in which a donor donates real estate but retains the right to use the asset (usually a home) for his or her life. Assets are accounted for either as assets (if they meet the criteria, i.e. they are primarily held and sold for income or profits to generate cash), or as assets (an asset that provides direct services to the government or its components). A liability is recognized for the estimated payments to be made on behalf of the asset over the life of the donor on the basis of the agreement.

These payments may include insurance, repairs or asset repairs. Deferred flows should be accounted for the difference between assets and liabilities and adjusted accordingly to the donor`s total maturity. In general, this new standard provides guidelines for recognition and measurement for situations where a government is the beneficiary of an irrevocable split-interest agreement. In these cases, a donor irrevocably transfers resources to an intermediary and the mediator manages these funds for the unconditional benefit of the government and at least one other beneficiary.