FASB proposes changes to the definition of collections

KPMG reports on FASB’s proposed amendments to ASC 958. The proposed ASU aims to realign the FASB’s definition of collections with the definition used in the American Alliance of Museums’ Code of Ethics for Museums.

Applicability

Proposed ASU on ASC Topic 958

• All entities that maintain collections, which primarily are not-for-profit entities.

Relevant dates

• June 26, 2018 – FASB issued proposed ASU
• August 10, 2018 – Comments due on proposed ASU

Key impacts

• Under current US GAAP, an entity need not recognize contributions of works of art, historical treasures and similar assets if they are added to collections and meet three criteria
• One of the criteria requires the entity to have an organizational policy that requires the proceeds from collection items that are sold to be used to acquire other collection items. This criterion would be expanded to permit the proceeds to be used to also support the direct care of existing collections
• The amendments would be effective on issuance for all entities and would be applied on a prospective or retrospective basis