Updating the Definition of Collections
Last updated on March 13, 2019. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
In the basis for conclusions of FASB Statement No. 116 (issued June 1993), Accounting for Contributions Received and Contributions Made, the Board’s objective in defining collections was to exempt entities from requiring capitalization of works of art, historical treasures, and similar assets that are to be preserved and protected. The Board concluded that those items are assets, regardless of the owner’s intent to sell or hold the items as part of a collection. However, the Board decided that the information necessary to recognize those items as assets was not compiled in the past, may no longer be available, and may be too costly to obtain. Therefore, the benefit of the information gained by recognizing these items would not justify the cost to provide the information, resulting in the Board having an objective to create a definition for collection items that would be exempt from recognition. Statement 116 based the definition of collections on the AAM’s Code of Ethics for Museums (1991) and its Accreditation Self-Study (1989). The Board used the documents as a basis for the definition of collections because the documents are widely used by the types of organizations that hold collections. The Board decided that it was relevant to have an organizational policy that requires the proceeds from the sale of collection items to be used to acquire other items for collections because it demonstrates a commitment and a probability that the collections will and can be maintained.
The Code of Ethics for Museums restricted use of the proceeds of the sale of collections to the acquisition of new collection items. However, there was strong pushback from museum professionals about the restriction because it limited museums from fulfilling their respective missions and responsibility to preserve their collections. Professionals stated that caring for and preserving collections are equally as important as their obligation to build their collections. Therefore, subsequently in November of 1993, several months after Statement 116 was issued, the AAM modified its Code of Ethics for Museums to allow the proceeds from the sale of collections to be used for the acquisition and the direct care of collections, instead of only for the acquisition of new collection items.
The Board discussed the results of external review of the FASB Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections. The Board made the following decisions:
Scope
The Board decided to clarify in the final Update that the scope of the guidance on collections in Subtopics 958-360 and 958-605 includes both not-for-profit and business entities, consistent with the pre-Codification guidance in FASB Statement No. 116, Accounting for Contributions Received and Contributions Made.
Other Issues
The Board considered comments raised by external reviewers surrounding the accounting for the enhancement of collection items, the prospective application of the Update, and the scope of applicability of the new disclosure concerning how an entity defines the term direct care. The Board decided not to change the final Update in these areas.
December 19, 2018
The Board discussed the staff’s research on direct care and completed redeliberations of the proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections. The Board made the following decisions:
Direct Care of Collections
The Board affirmed its decision to update the Codification Master Glossary definition of collections to include the concept of direct care. The Board discussed describing direct care in the amendments to the Codification but decided not to include such a description.
Disclosures
The Board decided to require that a collection-holding entity disclose its policies for the use of proceeds from deaccessioned (removed) collection items. The Board also decided that if a collection-holding entity allows proceeds from deaccessioned collection items to be used for direct care, the entity will be required to disclose what the entity considers direct care.
Transition
The Board decided to require prospective transition.
Effective Date
The Board decided that the amendments in the final Update would be effective for all entities for annual periods beginning after December 15, 2019, and for interim periods within annual periods beginning after December 15, 2020.
Analysis of Costs and Benefits
The Board concluded that it has received sufficient information and analysis to make an informed decision that the expected benefits of the amendments would justify the expected costs.
September 26, 2018
The Board discussed feedback received on its proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections, and began redeliberations.
March 28, 2018
The Board decided to add a project to its agenda to update the definition of collections in the Master Glossary of the Codification. The Board also completed deliberations and decided:
Last updated on March 13, 2019. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Objective:
The objective of this project is to update the FASB Accounting Standards Codification® Master Glossary definition of collections to include the concept of direct care. The updating of the definition will re-align the definition in the Codification Master Glossary with the American Alliance of Museums’ Code of Ethics for Museums.Background:
Several stakeholders raised a concern that the Codification’s Master Glossary definition of collections is inconsistent with the definition used by the American Alliance of Museums (AAM), previously known as the American Association of Museums. The AAM is the accrediting body for most museums in the United States. The Codification Master Glossary definition is currently narrower than the definition used by the AAM. Because of this difference, some museums are concerned that if they use the AAM definition of collections, which is broader than the Codification’s definition, their auditors may object to their accounting for collections under GAAP.In the basis for conclusions of FASB Statement No. 116 (issued June 1993), Accounting for Contributions Received and Contributions Made, the Board’s objective in defining collections was to exempt entities from requiring capitalization of works of art, historical treasures, and similar assets that are to be preserved and protected. The Board concluded that those items are assets, regardless of the owner’s intent to sell or hold the items as part of a collection. However, the Board decided that the information necessary to recognize those items as assets was not compiled in the past, may no longer be available, and may be too costly to obtain. Therefore, the benefit of the information gained by recognizing these items would not justify the cost to provide the information, resulting in the Board having an objective to create a definition for collection items that would be exempt from recognition. Statement 116 based the definition of collections on the AAM’s Code of Ethics for Museums (1991) and its Accreditation Self-Study (1989). The Board used the documents as a basis for the definition of collections because the documents are widely used by the types of organizations that hold collections. The Board decided that it was relevant to have an organizational policy that requires the proceeds from the sale of collection items to be used to acquire other items for collections because it demonstrates a commitment and a probability that the collections will and can be maintained.
The Code of Ethics for Museums restricted use of the proceeds of the sale of collections to the acquisition of new collection items. However, there was strong pushback from museum professionals about the restriction because it limited museums from fulfilling their respective missions and responsibility to preserve their collections. Professionals stated that caring for and preserving collections are equally as important as their obligation to build their collections. Therefore, subsequently in November of 1993, several months after Statement 116 was issued, the AAM modified its Code of Ethics for Museums to allow the proceeds from the sale of collections to be used for the acquisition and the direct care of collections, instead of only for the acquisition of new collection items.
Exposure Draft:
On June 26, 2018, the FASB issued Proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections. The due date for comment letters was August 20, 2018.- Download the Proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections.
Comment Letters:
- Read comment letters on the proposed Accounting Standards Update.
- Read the comment letter summary on the proposed Accounting Standards Update.
There are no media releases or educational materials at this time.
Decisions Reached at Last Meeting (March 6, 2019):
The Board discussed the results of external review of the FASB Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections. The Board made the following decisions:
Scope
The Board decided to clarify in the final Update that the scope of the guidance on collections in Subtopics 958-360 and 958-605 includes both not-for-profit and business entities, consistent with the pre-Codification guidance in FASB Statement No. 116, Accounting for Contributions Received and Contributions Made.
Other Issues
The Board considered comments raised by external reviewers surrounding the accounting for the enhancement of collection items, the prospective application of the Update, and the scope of applicability of the new disclosure concerning how an entity defines the term direct care. The Board decided not to change the final Update in these areas.
Tentative Board Decisions Reached to Date (as of March 6, 2019):
December 19, 2018
The Board discussed the staff’s research on direct care and completed redeliberations of the proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections. The Board made the following decisions:
Direct Care of Collections
The Board affirmed its decision to update the Codification Master Glossary definition of collections to include the concept of direct care. The Board discussed describing direct care in the amendments to the Codification but decided not to include such a description.
Disclosures
The Board decided to require that a collection-holding entity disclose its policies for the use of proceeds from deaccessioned (removed) collection items. The Board also decided that if a collection-holding entity allows proceeds from deaccessioned collection items to be used for direct care, the entity will be required to disclose what the entity considers direct care.
Transition
The Board decided to require prospective transition.
Effective Date
The Board decided that the amendments in the final Update would be effective for all entities for annual periods beginning after December 15, 2019, and for interim periods within annual periods beginning after December 15, 2020.
Analysis of Costs and Benefits
The Board concluded that it has received sufficient information and analysis to make an informed decision that the expected benefits of the amendments would justify the expected costs.
September 26, 2018
The Board discussed feedback received on its proposed Accounting Standards Update, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections, and began redeliberations.
March 28, 2018
The Board decided to add a project to its agenda to update the definition of collections in the Master Glossary of the Codification. The Board also completed deliberations and decided:
- To add the concept of direct care to the definition of collections to align the definitions in the Master Glossary and in the American Alliance of Museums’ Code of Ethics for Museums
- That the change in definition should be applied on a prospective basis.
The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
| March 6, 2019* | Board Meeting—The Board discussed the external review feedback received on the final Update. |
| December 19, 2018 | Board Meeting—The Board discussed the staff’s research on direct care and completed redeliberations. |
| September 26, 2018 | Board Meeting—The Board discussed comment letter feedback and began redeliberations |
| March 28, 2018 | Board Meeting—The Board added the Updating the Definition of Collections project to the technical agenda |
The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.
Rick Cole
Supervising Project Manager
racole@fasb.org
Jane Lazzara
Postgraduate Technical Assistant
jlazzara@fasb.org
Emma Lazar
Postgraduate Technhical Assistant
elazar@fasb.org
Supervising Project Manager
racole@fasb.org
Jane Lazzara
Postgraduate Technical Assistant
jlazzara@fasb.org
Emma Lazar
Postgraduate Technhical Assistant
elazar@fasb.org
The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.