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Office of Business and Finance

GASB 33: Exchange or Non-Exchange Transaction

An exchange or exchange-like transaction is one in which each party receives and sacrifices something of approximate equal value. A non-exchange transaction is one in which one party receives something of value without directly giving value in exchange. Grants can be either exchange or non-exchange transactions. GASB 33 only applies to non-exchange transactions.

GASB 33 applies to all non-exchange transactions, regardless of fund.

GASB 33 only applies to financial or capital resources; it does not apply to other resources, such as contributed services.

Non-exchange transactions may include, but are not limited to:

  • Fines & penalties: Asset and revenue recognized when enforceable legal claim arises or resources received, whichever is first. Appears that our current method of recognizing asset (receivable) and revenue when fines are assessed will not change. The ticket/fine is an enforceable legal claim.
  • Gifts/donations: Assets recognized when all eligibility requirements are met or funds are received; whichever is first. Revenue recognized when all eligibility requirements have been met. If gift is received prior to meeting eligibility requirements, it is recorded as deferred revenue. Eligibility requirements are conditions specified by a donor that must be met, such as time requirements, matching requirements. Purpose restrictions are not eligibility requirements and do NOT affect revenue recognition. Gifts received with purpose restrictions will be reported as restricted until used for designated purpose or until restriction expires.

    Some gifts are received with the stipulation that the resources cannot be sold, disbursed, or consumed until a specified number of years have passed or a specific event has occurred, such as endowments, term endowments, works of art and historical treasures. For these gifts, revenues are recognized when the resources are received, provided that all eligibility requirements are met. Resulting net assets/fund balance should be reported as restricted for as long as the restrictions or time requirements remain in effect.
  • Certain grants, entitlements: Assets recognized when all eligibility requirements are met or funds are received; whichever is first. Revenue recognized when all eligibility requirements have been met. If grant funds are received prior to meeting eligibility requirements, they are recorded as deferred revenue. Eligibility requirements are conditions specified by the grantor that must be met, such as an eligible recipient, time requirements, matching requirements, etc. If a reimbursement-type grant, institution must have incurred allowable costs prior to revenue recognition. Routine requirements such a filing a claim or a progress report do not delay recognition. Purpose restrictions are not eligibility requirements and do NOT affect revenue recognition. Grants received with purpose restrictions will be reported as restricted.
  • Promises to give (pledges): Must be promised by a non-governmental entity – individual, business, or organization. Asset (receivable) and revenue is recognized when all eligibility requirements are met and amount is verifiable, measurable, and collection is probable (likely to occur). It should be noted that endowment pledges are generally not recognized until received since the promise to not sell, disburse, or consume the asset cannot be honored until the asset has been received.