A nongovernmental not-for-profit organization received a $500,000 pledge in Year 1 to be used for a specific building project in Year 2. The donor paid the pledge in Year 2, and the building was constructed in Year 2. How should this contribution be reported in the Statement of Activities for Year 1 and Year 2?

Under ASC 958, an unconditional pledge is recognized as revenue in the year made (Year 1). Since it is for a future period/purpose, it is 'With Donor Restrictions'. In Year 2, when the purpose is met (building constructed) and time passes, the net assets are released from restrictions. This is shown as a reclassification in the Statement of Activities, not new revenue.