The following transaction is: Received a painting as a donation with a fmv of $15,000. What do I debit and credit?
Works of art, historical treasures, and other similar assets generally have to be capitalized at their historical cost (or estimated FMV at the time of donation) whether they are held as individual items or in a collection.
The estimated fair value of such asset at the date of acquisition is recorded by a debit to the asset account and a credit to Donated Equity (or some other appropriate title), a separate classification of the entity’s equity. The credit does not go to revenue in the income statement, cos that will be overstating the revenue, and consequently, net income.
February 25th, 2010 at 10:20 pm
Works of art, historical treasures, and other similar assets generally have to be capitalized at their historical cost (or estimated FMV at the time of donation) whether they are held as individual items or in a collection.
The estimated fair value of such asset at the date of acquisition is recorded by a debit to the asset account and a credit to Donated Equity (or some other appropriate title), a separate classification of the entity’s equity. The credit does not go to revenue in the income statement, cos that will be overstating the revenue, and consequently, net income.
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