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Accounting for Sale of Asset: Non-profit Entity

David Young's Profile

I am doing some pro-bono finance and accounting work for a non-profit medical clinic. They have an accounting situation that I am unsure how to handle. A piece of hospital equipment was donated to the non-profit (FMV of $175,000 according to a recent appraisal obtained by the donor organization). They (the non-profit) would like to sell the item for cash to support the lease of new clinic space. They have been in touch with a broker that has already lined up a buyer. The broker will pay the non-profit $80,000 for the equipment and will turn around and sell to the end buyer for $90,000. How should this be recorded from an accounting standpoint? From conversations I've had so far, I've been told that it could be recorded as an in-kind contribution of $175,000 for receiving the donated equipment; $90,000 increase in cash for the sale of the asset; $10,000 expense for broker expense; and $85,000 as a capital loss ($175k-90k ... also, not sure if it is called a capital loss in the non-profit world). This type of transaction is outside my area of expertise; so any advice is appreciated! Thanks!


Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

I couldn't have explained it better myself!


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