Business Procedures Manual

Fiscal Affairs Division

1.4 Exchange versus Non-Exchange

(Last Modified on February 25, 2016)

GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, and 65, Items Previously Reported as Assets and Liabilities, establishes accounting and reporting standards for non-exchange transactions. These statements divide non-exchange transactions into four classes:

  1. Derived tax revenues
  2. Imposed non-exchange transactions
  3. Government-mandated non-exchange transactions
  4. Voluntary non-exchange transactions

The class most frequently found in the USG is voluntary non-exchange transactions. GASB Statement No. 33 defines a non-exchange transaction as one where 鈥渁 government (including the federal government, as provider) either gives value (benefit) to another party without directly receiving value in exchange or receives value (benefit) from another party [including individuals and other private sector entities] without directly giving value in exchange.鈥

GASB Statement No. 33 establishes time requirements and purpose restrictions for non-exchange transactions. Time requirements affect the timing of recognition of non-exchange transactions. Recipients of resources with purpose restrictions should report the assets as restricted until the resources are used for the specified purpose.

The following table provides additional guidance on non-exchange transactions.

Class Recognition

Government-mandated nonexchange transactions

Examples: federal government mandates on state and local governments

Voluntary nonexchange transactions

Examples: certain grants and entitlements, most donations

Recipients:

Assets
Period when all eligibility requirements have been met.

Liabilities
Receipt of resources before elgibility requirements are met, excluding time requirements.

Deferred inflows of resources
Receipt of resources before time requirements are met, but after all other eligibility requirements have been met. When modified accrual accounting is used for revenue recognition, resources that are not “available”.

Revenues
Period when all eligibility requirements have been met. However, when a provider precludes the sale, disbursement, or consumption of resources for a specified number of years, until a specified event has occurred, or permanently (for example, permanent and term endowments), report revenues when the resources are received and report resulting net position or fund balance as restricted. When modified accrual accounting is used for revenue recognition, resources also should be “available.”

Providers:

Assets
Payment of resources before eligibility requirements are met, excluding time requirements.

Liabilities
Period when all eligibility requirements have been met.

Deferred inflows of resources
Payment of resources before time requirements are met, but after all other eligibility requirements have been met.

Expenses or expenditures
Period when all eligibility requirements have been met. However when a provider precludes the sale, disbursement, or consumption of resources for a specified number of years, until a specified event has occurred, or permanently (for example, permanent and term endowments), report expenses or expenditures when the resources are paid.

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