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GAAP For Non-Profits › General Reporting Matters

Non-Monetary Transactions

Sometimes an organization will make a transaction or trade that does not involve cash. For example it might trade a car for a van. According to the guidance of s. 3831 of the CICA handbook, where the organization exchanges an asset that is used in the provision of services for another asset to be used in the provision of services, the book value of the asset given up would be used as the book value of the asset received, and no gain or loss would be recorded.

The guidance of this section of the handbook needs to be thought through carefully in its application to non-profit organizations. This section of the handbook is chiefly geared to the accounting of for-profit organizations. Let us consider a possible scenario in a non-profit organization: in our above example, the van received may have a significantly greater value than the car, and the organization may in fact be receiving a donation for the difference. The donation should be recorded.

Section 3831 recommends using the fair value of the assets given up as the cost of the assets acquired, where the transaction is a part of the earnings process. This concept is likely not be applicable to the majority of non-monetary transactions entered into by non-profit organizations.