In March 1986, FASB added a project to its agenda to establish accounting standards for certain pervasive transactions of not-for- profit organizations. The project evolved into a consideration of three broad issues: accounting for depreciation, standards for financial statement display, and accounting for contributions and for works of art, historical treasures, and similar items ("collection items").

The depreciation issue resulted in SFAS 93, "Recognition of Depreciation by Not-for-Profit Organizations." That statement concludes that not-for-profit organizations should recognize depreciation for all long-term, tangible assets except certain works of art and historical treasures. The financial statement display issue has thus far generated a 1989 Invitation to Comment, "Financial Reporting by Not-for-Profit Organizations: Form and Content of Financial Statements." The major matters in the Invitation to Comment concern the scope, form, and content of required financial statements. This article describes the third issue, accounting for contributions and for collection items, and analyzes the impact the project could have on the financial statements of museums and similar institutions, as well as other not-for-profit entities, such as colleges and universities that own collection items.

Alan S. Glazer, PhD, CPA, is Associate Professor of Business Administration at Franklin and Marshall College, Lancaster, Pennsylvania.

Henry R. Jaenicke, PhD, CPA, is the C.D. Clarkson Professor of Accounting at Drexel University, Philadelphia.

PHOTO : "Old Man in Military Costume" circa 1630-1631, Rembrandt