Promise to give definition
/What is a Promise to Give?
A promise to give is an agreement to give cash or other assets to a third party. The donor then has an obligation to complete the transaction, while the recipient has an expectation of receipt. There are two types of promise, which are the conditional and unconditional promise. The accounting for them is noted below.
Accounting for a Conditional Promise
If a contributor makes a contribution that is a conditional promise to give, only recognize the asset when the underlying conditions have been substantially met.
Accounting for an Unconditional Promise
If a donor makes a contribution that is an unconditional promise to give, recognize the contribution when received. This calls for sufficient verifiable documentation that the promise was both made and received. The promise should be legally enforceable. If a contributor is able to rescind the promise to give, do not recognize the asset being contributed.