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On June 21, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-08
Not-for-Profit Entities (Topic 958) – Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The amendments in the ASU apply to all entities, including business entities, that receive or make contributions of cash or other assets, including promises to give within the scope of Subtopic 958-605
Not-for-Profit Entities – Revenue Recognition and contributions made within the scope of Subtopic 720-25
Other Expenses – Contributions Made. The amendments do not apply to the transfer of assets from government entities to business entities.
The amendments clarify and improve current guidance on determining whether a transaction should be accounted for as a contribution or as an exchange transaction. Criteria are provided in this amendment for determining whether the resource provider is receiving commensurate value in return for the resources transferred. The outcome of this assessment determines whether the entity follows contribution guidance in Subtopic 958-605 or exchange transaction guidance in Topic 606
Revenue from Contracts with Customers and other applicable standards.
The amendments also provide increased guidance on determining whether the contribution is conditional or unconditional, and for distinguishing a donor-imposed condition from a donor-imposed restriction.
The amendments allow a not-for-profit entity to elect the simultaneous release accounting policy options for donor-restricted contributions that were initially conditional contributions without also having to elect the policy for other donor-restricted contributions.
For the following resource recipients, the amendments are effective for annual periods beginning after June 15, 2018, including interim periods therein:
For all other entities who are resource recipients, the ASU should be applied to annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
For the following resource providers, the amendments are effective for annual periods beginning after December 15, 2018, including interim periods therein:
For all other entities who are resource providers, the ASU should be applied to annual reporting periods beginning after December 15, 2019, and interim periods within annual periods after December 15, 2020.
Early adoption of the amendments is permitted.
The amendments in the ASU should be applied on a modified prospective basis. Retrospective application is permitted.
To access the full script of ASU No. 2018-08, click
For more information on the financial reporting library, contact a local
MNP Assurance Professional, or
Jody MacKenzie, Director, Assurance Professional Standards.
This communication contains a general overview of the topic and is current as of June 21, 2018. The application of the principles addressed will depend upon the particular facts and circumstances of each individual case. Accordingly, this publication is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional, who can address any variance that may be required to reflect your circumstances. Please contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2018. All rights reserved.
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