Under FASB, a pledged but unconditional contribution from donor restrictions would be recognized as what at pledge date?

• A. A contribution of $100,000 realized when cash is received
• B. A contribution of $100,000 in the year the pledge was made, discounted for present value
• C. Revenue when pledged
• D. A liability for future payments

Answer: (B)

The main idea is how not-for-profit entities account for unconditional donor pledges that will be collected in the future. When a donor makes an unconditional promise, the organization records a pledges receivable and contributions revenue in the period of the pledge, not when cash arrives. If the collection date is in a future year, the promised amount is discounted to present value to reflect the time value of money. The corresponding increase is in net assets with donor restrictions if the pledge is restricted. The difference between the promised amount and its present value is recognized over time as interest (accretion) on the receivable.

So the pledge is recorded in the year of the promise at the present value of the future cash, not the full face amount or cash received later. That aligns with recognizing a contribution of $100,000 in the pledge year, discounted to present value.