Financial Reporting

Question 1

What is the correct FR treatment of crowdfunding donation received (ASPE)?

Answer 1

First, ask yourself: what are the characteristics of this cash? What are the terms?

• Revenue: The inflow of cash, receivables or other consideration arising in the course of the ordinary activities of an enterprise.
• No
• Equity: The ownership interest in the assets of a profit-oriented enterprise.
• No

*Liability: N/A, as generally no terms associated with repayment with crowdfunding.

• Gain: Increases in equity from peripheral or incidental transactions and events affecting an entity and from all other transactions, events and circumstances affecting the entity. Gains are generally recognized when realized.
• Yes

Presentation: Shown separately on the income statement from revenue.

Question 2

What is the correct FR treatment of cash injection received (ASPE)?

Answer 2

First, ask yourself: what are the characteristics of this cash injection? What are the terms?

*Liability: Obligations of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.

• Equity: The ownership interest in the assets of a profit-oriented enterprise. Two options:
• share capital
• contributed surplus

If presented as shares, there are additional costs, including:

• Professional fees (legal, accounting)
• Administrative
• Marketing