Community Helpers, a nongovernmental NFP, received a pledge of $50,000 in Year 1 to be paid in Year 3. The pledge is unconditional. The appropriate discount rate is 5%. How should this pledge be recognized in Year 1?

Unconditional promises to give (pledges) are recognized as revenue in the period the promise is made. Because the cash will not be received until Year 3, there is an inherent time restriction, classifying it as 'with donor restrictions'. Multi-year pledges should be recorded at the present value of estimated future cash flows.