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If we received donations, we must record it in our books as an income and present it in income statement....and finally to be closed in Retained Earnings in Balance Sheet. In other words , donations must pass through income statement to retained earnings . If donations is in cash ......there is no problem. But if it is assets ....it must be recorded at fair market value of received assets.
They can also be receipted in a general receipt with a folio that represents financing activities not aligned with the business processes.
Donation received is to be classified in cash flow from financing activities.
