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as a separate line item on the face of its statement of activities. The separate line item shall be appropriately described, for example, as excess of consideration paid over net assets acquired in acquisition of Entity AB (or as excess of liabilities assumed over assets acquired in acquisition of Entity AB). [FAS 164, paragraph 71, sequence 71.1] Example 5 (see paragraphs 958-805-55-59 through 55-61) illustrates one way an acquirer might present that amount in its statement of activities. [FAS 164, paragraph 71, sequence 71.2]

958-805-45-5 An NFP acquirer shall report the inherent contribution recognized in accordance with paragraph 958-805-25-31 as a separate line item on the face of the statement of activities. The separate line item shall be appropriately described, for example, as excess of assets acquired over liabilities assumed in donation of Entity XY or as contribution received in donation of Entity XY. In another situation, that excess might be described as excess of fair value of net assets acquired over consideration paid in acquisition of Entity XY. [FAS 164, paragraph 72, sequence 72.1]

958-805-45-6 An NFP acquirer shall classify the inherent contribution received presented in accordance with the preceding paragraph on the basis of the type of restrictions imposed on the related net assets. In classifying those net assets, an acquirer shall do both of the following: [FAS 164, paragraph 73, sequence 73.1]

  • a.

    Include restrictions imposed on the net assets of the acquiree by a donor before the acquisition and those imposed by the donor of the business or nonprofit activity acquired, if any, in accordance with Section 958-605-45. [FAS 164, paragraph 73, sequence 73.1.1]

  • b.

    Report donor-restricted contributions as restricted support even if the restrictions are met in the same reporting period in which the acquisition occurs. That is, the acquirer shall not apply the reporting exception in paragraph 958-605-45-4 to restricted net assets acquired in an acquisition. [FAS 164, paragraph 73, sequence 73.1.2]

958-805-45-7 Thus, the inherent contribution received may increase permanently restricted net assets, temporarily restricted net assets, unrestricted net assets, or some combination of those items. Example 6 (see paragraphs 958-805-55-62 through 55-67) illustrates the application of the preceding paragraph’s guidance on reporting donor-imposed restrictions on an inherent contribution received. [FAS 164, paragraph 73, sequence 73.2]

958-805-45-8 An NFP acquirer that transfers assets as consideration for an acquired nonprofit activity or business shall assess whether that transaction satisfies a donor-imposed restriction (see the following paragraph) or otherwise results in a change in its net asset classifications (see paragraph 958-805-45- 10). [FAS 164, paragraph 74, sequence 74.1]

958-805-45-9 For example, transferring consideration in an acquisition might satisfy a donor-imposed restriction on the acquirer’s net assets that were restricted for acquisition of land, buildings, works of art, or other long-lived assets


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