The Financial Accounting Standards Board has very specific directions for recording donated assets. Companies donating the asset — in this case, land — simply mark it as a charitable contribution. The receiving company, however, has a bit more work to do. Accountants must document the date the land was received and its value. From here, accountants will prepare journal entries to record the transaction into the general ledger of the company.

Unrestricted Land Gift

Write the journal entry. Include account names, numbers, land dollar value and brief journal entry description.

Enter a debit to the land account, an asset that resides on the balance sheet.

Enter a credit to other revenue. Donations received — including land — by a company is other revenue.

Restricted Land Gift

Write the journal entry. Include account names, numbers, land dollar value and brief journal entry description.

Enter a debit to the land account, an asset that resides on the balance sheet.

Enter a credit into an account called temporarily restricted net assets. The land value remains here until the company meets requirements to remove the restrictions.

Debit temporarily restricted net assets once the company can use the land. Credit an account called 'net assets released used for operations' to complete the entry.

Tip

Restricted gifts often occur when a company receives land for a specific purpose. For example, the donor may gift the land for the purpose of building a hospital. The receiver can post the latter entry once they build the hospital.

When using a manual general ledger, hand write the journal into the proper accounts. You should post journal entries into a computerized accounting software system following the system instructions.