Conditional vs Unconditional Contribution: When Does a Not-for-Profit Recognize Revenue?
A restriction tells the NFP how to use resources; a condition can delay recognition until a barrier is overcome.
Unconditional contribution
An unconditional promise generally supports contribution recognition when the applicable recognition criteria are met.
Conditional contribution
A conditional contribution includes a barrier that must be overcome and a right of return or release.
Restriction versus condition
A donor restriction affects classification or use; a donor condition can affect whether revenue is recognized yet.
Exam strategy
Ask whether failure to meet the requirement causes return or release of the promised resources.
The takeaway
Conditions can delay contribution recognition; restrictions usually govern use after recognition.
Related Summit resources
FAQ
What is the core idea?
Conditions can delay contribution recognition; restrictions usually govern use after recognition.
What should you identify first?
A restriction tells the NFP how to use resources; a condition can delay recognition until a barrier is overcome.
Why does this matter on the CPA Exam?
Separate donor restrictions from true donor-imposed conditions in contribution accounting.