TECHNICAL ASSISTANCE NOTE
No. 2004-02
School Support Services
Contact: Kimberly Ferrell
Office of Funding and Financial Reporting
Department of Education
(850) 245-0405
Jim Horne, Commissioner
Accounting for Commodities
SC 205-0405
DATE:
January 26, 2004
TO:
District Finance Officers
FROM:
Linda Champion, Administrator
SUBJECT:
Accounting for Commodities
This memorandum provides guidance regarding the required accounting treatment for United
States Department of Agriculture (USDA) donated commodities received by a school district.
Since USDA vendors are now allowed to fill commodity orders with products packaged in
commercial labels, in many cases recipients are unable to distinguish commodities inventory
from purchased food inventory. As a result, USDA now allows the state to adopt a single
inventory method for commodities and purchased food.
Revisions to the Code of Federal Regulations, Title 7, Part 250.14(e) and 250.16(a)(2), removed
“recipient agencies” from school food authorities required to comply with these sections. These
revisions eliminate the requirement for school districts to maintain separate commodity inventory
records for federal reporting purposes.
In order to comply with generally accepted accounting principles as reflected by Governmental
Accounting Standards Board (GASB) Statements 33 and 34, the following guidance is provided
for school districts to account for the receipt and use of USDA donated commodities.
The fair value of commodities should be recognized as revenue in the period in which the
commodities are received by the school district (Guide to Implementation of GASB Statement 34
and Related Pronouncements Q&A, Q152). Upon receipt of commodities, the following entry is
required:
1150 Inventory
XXX
3265 USDA Donated Commodities
XXX
TAN Note 04-02
January 26, 2004
Page 2
Generally accepted accounting principles require inventories to be recorded as an asset.
Therefore, at the end of the accounting period, the commodities consumption should be
calculated based on an inventory cost flow assumption or the actual remaining inventory of
commodities. The consumption for the year should be recorded with the following entry:
7600/580 Commodities
XXX
1150 Inventory
XXX
In addition, since inventories represent resources that are not appropriable for expenditure, food
inventories in the special revenue fund should be reflected as a reservation of fund balance
(GASB Codification Section 1800.139). Inventories of commodities also involve purpose
restrictions and therefore, should be presented as restricted net assets along with the other
available resources of the special revenue fund in the government-wide statement of net assets
(GASB Statement 33, paragraph 14).
If you have questions or need further assistance, please contact our office.
LC:kf:js
cc:
Superintendents
