Establish the current fair market value (FMV) of the asset. If there is a consistent market for the asset with established prices, use that amount. If the asset is not often sold on the market, you can either estimate the price based on comparable asset prices or obtain an independent appraisal.
How to journalize and record donations is addressed in FASB Statement Number (FAS) 116. The Financial Accounting Standards Board (FASB) is the recognized authority on American financial accounting and establishes the Generally Accepted Accounting Procedures (GAAP) for U.S. guidelines. Under these rules, generally all donations are recorded at their fair value regardless of any depreciation taken on the asset prior to the donation.
Debit assets for the FMV of the donated asset. Debits increase assets and expense accounts and decrease liabilities, equity and revenues.
Credit revenues or gains for the FMV of the asset. Credits are the opposite of debits and decrease assets and expense accounts and increase liabilities, equity and revenues.
- Financial Accounting Standards Board: Facts About FASB.
- Financial Accounting Standards Board; Statement of Financial Accounting Standards No. 116 – Accounting for Contributions Received and Contributions Made; 1993.
- ventureline.com: Debit Definition.
- ventureline.com: Credit Definition.
- Nonprofit Accounting Basics; FAS 117; 2011.