During the year a donor pledged $2,000,000 in funds to a not-for-profit private charter school. The school will receive the pledge if it is able to raise an additional $2,000,000 in matching funds over the next three years. According to the FASB, how would this pledge be recorded?

• A. It would be recorded as a conditional pledge.
• B. It would be recorded as a donor-imposed restricted contribution.
• C. It would be recorded as revenue at the time of the pledge.
• D. It would not be recorded.

Answer: (D)

A pledge that depends on a future condition is not recognized yet. Under FASB, contributions are recorded only when they are unconditional or when the donor-imposed condition is substantially met. Since the $2,000,000 pledge is contingent on the school raising an additional $2,000,000 in matching funds, it is a conditional promise and no revenue or receivable is recorded at the time of the pledge. The pledge remains not recorded until the condition is substantially met. If and when the condition is satisfied, the contribution would then be recognized as revenue (with any applicable restrictions) and, if not yet received, a receivable would be recorded.