Treatment of Subscriptions, Donations, Legacies, Entrance Fees and Life Membership Fees

A handful of items recur in almost every Not for Profit concern's accounts and need a settled, standard treatment.

Subscriptions

Since subscriptions are the main revenue item, the amount actually RECEIVED during the year (as shown in the Receipts and Payments Account) must be converted to the amount actually EARNED for the current year (to be shown in the Income and Expenditure Account), using the accrual basis:

Any subscription still outstanding at the year end is shown as a current asset in the closing Balance Sheet; any subscription received in advance for the following year is shown as a current liability.

Donations

A large, one-time general donation is sometimes capitalised (added directly to the Capital Fund) if it is unusually large in relation to the concern's normal income, or if the question specifically instructs so — otherwise, the default treatment for a general donation is to route it through the Income and Expenditure Account as revenue income.

Legacy

A legacy is, by its very nature, a one-time, non-recurring receipt, so it is treated as a capital receipt and shown directly on the liabilities side of the Balance Sheet (usually added to the Capital Fund), never credited to the Income and Expenditure Account, unless the concern's stated policy, or the question, specifically treats it as revenue income.

Entrance Fees

Entrance fees are, strictly, a one-time capital-type receipt (since a member pays it only once). However, because most concerns admit new members every year and the amount tends to recur year after year in broadly similar amounts, the generally accepted and more common treatment — followed unless a question states otherwise — is to credit entrance fees in full to the Income and Expenditure Account as revenue income of the year received.

Life Membership Fees

Because a life membership fee is meant to substitute for a whole stream of future annual subscriptions, it is always treated as a capital receipt and added directly to the Capital Fund in the Balance Sheet — never credited to the Income and Expenditure Account of a single year.

Sale of Old Newspapers, Old Sports Material and Old Assets

• Sale of old newspapers, old periodicals, or unusable old sports material is a small, recurring item and is treated as revenue income, credited in full to the Income and Expenditure Account.
• Sale of a fixed asset (e.g. old furniture, an old vehicle) is a capital receipt; only any profit or loss on the sale (sale proceeds compared with the asset's book value) is transferred to the Income and Expenditure Account, and the asset is removed from the Balance Sheet.

Specific Funds …