Discussion:Valuing inventory on a non-profit
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Discussion Forum Index --> Accounting Questions --> Valuing inventory on a non-profit
Ksnoopytax (talk|edits) said: | 16 September 2009 |
| I have a non-profit client who has received a large chunk of inventory donated by a retail store for use in their operations. The donated inventory is listed on the client's books at retail value but FASB 116 says it should be on the books at FMV. I am having a hard time trying to figure out what FMV should be? The items donated are nice rugs and furnishings. Does anyone out there have a good process for determining FMV on these items? | |
| 16 September 2009 | |
| Why isn't retail the same as FMV. When I had my retail store I firmly believed that everything was priced at FMV. Otherwise it would be a ripoff. Oh wait, it was a mini market, maybe I was ripping people off. But, it was 2AM, maybe at 2AM it was FMV? | |
Ksnoopytax (talk|edits) said: | 17 September 2009 |
| I can see your point. I don't know if this stuff is inventory they want to get rid of or current inventory that they currently stock for retail prices. I assumed that since they are donating this, they can't sell it for enough to justify keeping it in inventory. Unless, of course, they are doing that out of the goodness of their heart. | |
| 17 September 2009 | |
| I typically do a couple of online searches to find similar items and use those prices. How much are we talking here? If it's over $5K, the donor may need an appraisal to claim a tax deduction, which you could use for your purposes as well. Of course, this is the accounting forum, but just thought I would mention it. | |
| September 17, 2009 | |
| If the goods are going to be used by the organization, then I would say using the retail prices are a reasonable basis for determining the FMV. If the organization is going to sell the goods, then FMV will probably be whatever they can get for the goods. If the goods have not been sold, you could use some kind of discount rate.
The value that a donor uses is not necessarily the fair market value required for the nonprofit's purposes. | |
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