At its meeting on July 20-21, 2022, the AcSB continued discussing the Exposure Draft proposals related to the recognition of revenue for restricted contributions and capital asset contributions. The AcSB discussed the proposed guidance for determining whether a contribution is externally restricted. The Board reached a preliminary decision that for a contribution to be externally restricted, the restriction must be: (i) explicitly communicated by the contributor; (ii) sufficiently specific in directing the organization how the resources must be used, beyond being used for the organization’s general mandate; and (iii) substantive. The AcSB discussed factors that would indicate a restriction is substantive, including scenarios where a significant constructive obligation would indicate a restriction is substantive. With respect to the recognition of revenue from restricted contributions, the AcSB reached a preliminary decision that an externally restricted contribution should be deferred and subsequently recognized in revenue when the substantive external restrictions are met. The AcSB reaffirmed its tentative decision from its May 2022 meeting that capital asset contributions should be accounted for consistently with other types of restricted contributions. Therefore, a capital asset contribution should be deferred when there is a substantive external restriction on the use of the asset. For example, a contributed capital asset with an external requirement to use that asset in line with the general mandate of the organization would not be deferred because the requirement is not sufficiently specific and, therefore, is not considered externally restricted. The AcSB will continue discussing the Exposure Draft proposals at its September 2022 meeting and plans to issue an Exposure Draft in the first quarter of 2023.

Review the Executive Summary on the AcSB's Web site.