Accounting for Transfers of Assets in Which a Not-for-Profit Organization Is Granted Variance Power—an interpretation of FASB Statement No. 116
Paragraph 4 of FASB Statement No. 116, Accounting for Contributions Received and Contributions Made, states: "This Statement does not apply to transfers of assets in which the reporting entity acts as an agent, trustee, or intermediary, rather than as a donor or donee." This Interpretation clarifies that an organization that receives assets acts as a donee and a donor, rather than as an agent, trustee, or intermediary, if a resource provider specifies a third-party beneficiary or beneficiaries and explicitly grants the recipient organization the unilateral power to redirect the use of the assets away from the specified beneficiary or beneficiaries (variance power).
This Interpretation is effective for financial statements issued for fiscal years ending after September 15, 1996. Earlier application is encouraged. This Interpretation may be applied either retroactively or by reporting the cumulative effect of the change in the year of the change.