What is Donated Capital?
Donated capital is assets given to an entity as a gift. This amount is recorded at its fair value as of the date when the gift was received. Donated capital is usually received by non-profit entities, since donors are more likely to provide them with assets. However, it is possible for a for-profit entity to receive donated capital, as noted in the following example.
Example of Donated Capital
As an example of donated capital, a manufacturing facility receives a parcel of land as a gift from a local community when the business agrees to construct a facility there. The company’s controller has an appraiser determine the fair value of the land parcel, and records this amount in the firm’s accounting records.
