CPA Help!! How do you make a journal entry for donated stocks?

Question

Stocks were donated to a foundaton in the amount of $150,000. How do you record that as a journal entry. I know you debit securites but what is the credit side of it? Thanks.

Answer 1

You debit the asset at fair value and credit income in your Statement of Income and Expenditure. In this statement, you will have donations in cash and otherwise, so it will look like this:

INCOME
Donations - cash
Donations - others

and your securities should be under "Donations -others". Remember the securities must be booked in at fair value not at their original cost. If the donor had paid $150k for them years ago but on the day he donates them to you they were traded at $100k on the stock market, then you can only book them in at $100k.

Answer 2

Entries:
Debit: Investment in XYZ
Credit : Donated Revenue