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Business and Financial Policies and Procedures

Non-Monetary Exchange FAQs

1. In a non-monetary exchange how is the fair market value determined for goods or services received or provided?
You can determine the fair market value of goods or services by consulting cash sales of similar goods or services, prices in catalogues or vendor price lists, auction values, independent appraisal, or any other external source documenting a transaction that gives a fair and unbiased value for similar goods or services. Consult Methods of Valuing Non-Monetary Exchanges.

2. Are equipment trade-ins considered non-monetary exchange transactions?
No. Trade-ins are accounted for as a part of the acquisition in valuing the new asset. They are not considered a separate non-monetary exchange transaction.

3. Are discounts considered non-monetary exchange transactions?
No. Discounts offered by vendors for volume purchases, or as a qualifying educational institution, are considered a normal aspect of doing business. The University does not receive goods or services in exchange for the price reduction.

4. How will non-monetary exchange transactions appear on my financial statements?
University Accounting and Financial Reporting (UAFR) will record these in Banner using the appropriate revenue and expense account codes using Rule Code 112. In most cases, there is usually no net effect to fund balance or cash because the expense and revenue transactions offset each other. For example:

A unit is charged a reduced rate of $250 (normally $500) per day for use of a local hotel's conference room for a University-sponsored event. In exchange, the unit provides advertising on brochures and flyers publicizing the event, which has an estimated fair market value of $200. The value of the non-monetary exchange is $200 (fair market value of services provided by the University). The following entries are posted on the unit's statement:

Debit - Meeting Space Rental Expense $200
Credit - Advertising Income $200

5. In what type of fund should we record our non-monetary exchange?
Usually you will record the revenue and expense transactions related to the non-monetary exchange in a self-supporting fund because you are providing goods or services to an outside party in return for non-cash revenue that you are receiving. If you have questions about which C-FOAP to use, contact UAFR at uas@uillinois.edu.

6. Can there be a gift and a non-monetary exchange to record in the same transaction?
Yes, when a gift transaction involves both receiving and providing goods and/or services, a non-monetary exchange is likely to be involved. See "Sponsorship Agreement" and "Gift-in-Kind" in Methods of Valuing Non-Monetary Exchanges.

7. When we receive a cash gift and also provide goods or services to a donor that are significantly less than the value of the gift, is a non-monetary exchange involved?
Not unless goods or services are also received by the University. Otherwise, the amount of a gift is recorded only as the amount of cash received minus the value of goods or services provided (with the goods and services recorded as a non-gift.) The remainder of cash received is recorded in the associated gift fund as "non-gift revenue." For example:

To help underwrite a conference, a unit receives a sponsorship gift for $10,000 that includes providing the sponsor approximately $2,000 in conference tickets. A gift transmittal form with $8,000 gift and $2,000 non-gift is sent to the University Foundation as required. The following entries are posted in the University gift fund:

Debit - Cash $8,000 
    Credit - Gift Revenue $8,000
Debit - Cash $2,000
    Credit - Non-Gift Revenue $2,000

If you have questions about this type of transaction, contact UAFR at uas@uillinois.edu.

8. What if it appears that a non-monetary exchange is included in a grant or contract agreement? Do I report it separately?
No. Consult with your campus post-award grants office. They will collaborate with UAFR to determine if special accounting is needed.

9. What if one party fails to fulfill the terms of the agreed exchange, but the other party fulfills it without penalty?
This should rarely, if ever, occur. If it does, contact University Counsel (217-333-0560) to determine legal ramifications and contact UAFR at uas@uillinois.edu for accounting assistance.

Related Policies and Procedures

Methods of Valuing Non-Monetary Exchanges

Last Updated: June 2, 2014 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 2009

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