During a discussion last Wednesday concerning its project on revenue recognition of grants and contracts by nonprofits, the Financial Accounting Standards Board (“FASB”) agreed to refine guidance under Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition. Specifically, the FASB clarified the definition of a “donor-imposed condition” by including the following:
A right of return, involving either a return of assets transferred or a release of a promisor from its responsibility to transfer assets.
A barrier that must be overcome before the recipient receives transferred or promised assets. Indicators and illustrative examples would help describe a barrier.