The statement of activities provides information about the increase or decrease in an NFP’s net assets during the period. Its purpose is described in ASC 958-220-05-2.

ASC 958-205 and ASC 958-220 specify the basic information to be reported in the statement of activities. The guidance permits flexibility in the titles used for the statement, as long as they are appropriately descriptive.

First, NFPs are required to classify revenues, expenses, gains, and losses using two broad classifications of net assets. Net assets with donor restrictions is a special component of net assets that reflects activity involving donor-restricted contributions and related investment return that is restricted. Net assets without donor restrictions reports all other activity. In addition, ASC 958-220-45-1 requires that the statement of activities display, at a minimum, the change in net assets and the change in net assets with and without donor restrictions.

Revenues are reported as increases in net assets without donor restrictions unless the use of the assets received is limited by donor-imposed restrictions. As a donor’s restrictions are satisfied, a reclassification is made from the restricted component of net assets to the component without donor restrictions (see NP 3.4.3). Expenses are reported as decreases in net assets without donor restrictions, with the exception of investment expenses, which must be netted against investment return and reported in the net asset category in which the net investment return is reported. For additional information on reporting expenses, see NP 3.5.

Apart from mandating the reporting of activities by net asset classes and requiring certain basic totals and subtotals, ASC 958-205 does not prescribe the use of any particular format for the statement of activities. To accommodate the requirement to report activities by net asset class, NFPs can use single-column, multi-column, single-page, or multi-page formats as they see fit. ASC 958-205-55-10 through ASC 958-205-55-17 illustrate some (but not all) of the permissible formats, highlighting the baseline totals and subtotals required. While the illustrative statements show items of revenues, gains, and reclassifications first, followed by expenses and losses, ASC 958-205-55-11 explicitly states that those items can be arranged in other ways, and other subtotals may be included.

Within the classes of net assets, NFPs may also choose to classify revenues and expenses in ways that they believe will provide meaningful information to users of their financial statements, such as operating and nonoperating (see NP 3.4.2), expendable and nonexpendable, recurring and nonrecurring, or by operating units. Many NFPs customarily use at least one intermediate subtotal; since the guidance does not limit their use, the subtotals (except for the performance indicator) are often defined differently for each NFP. ASC 958-220-55-5 provides an example that illustrates how items may be sequenced to distinguish between operating and nonoperating activities or to make other distinctions, if desired.

The degree of aggregation and order of presentation of items of revenues and expenses in the statement, although not specified, generally should be similar to those required or permitted for business entities. ASC 958-220-45-14 requires revenues and expenses to be reported gross, except for certain investment expenses that are required to be netted against the related investment return. Gains and losses may be presented on a net basis, similar to business entities.

If discontinued operations are present, their results are reported just above the total change in net assets, preceded by appropriate subtotals (see NP 3.4.). If a newly-issued standard requires that the effect of an accounting change be reported as a cumulative effect adjustment to the change in net assets of the period, that amount would be displayed in a manner similar to discontinued operations, unless the transition requirements provide otherwise (see NP 3.4.5).

If the NFP has a less-than-wholly-owned subsidiary, and, therefore, must report a noncontrolling interest in the net assets of the subsidiary, it must apportion the consolidated change in net assets between the parent’s controlling interest and the noncontrolling interest. This information is typically provided through note disclosure, rather than through display on the face of the statement of activities. For more information, see NP 3.6.