In accordance with FASB standards, securities donated to a not-for-profit organization should be recorded at the:

• A. Cost.
• B. Fair value at the date of the gift.
• C. Amortized cost.
• D. Historical value.

Answer: (B)

Donated securities are recorded at fair value on the date of the gift because that amount represents the resources the nonprofit actually has available from the donation today. Recording at fair value ensures the asset and the contribution revenue reflect the donor’s gift accurately, rather than an historical cost or an amount that might not reflect current market value. If the securities are later sold, any realized gains or losses would impact net assets, but the initial entry at the donation date uses fair value to capture the true economic value of the gift. For example, a donation with a fair value of 50,000 would increase investments and contribution revenue by 50,000, establishing the correct starting point for the asset and the change in net assets.