The liability of the NFP organisation for its commitment to the donor or donor recipient under an irrevocable agreement of fractional interest should be analysed in order to determine whether it is eligible for the derogation provided for in paragraph 10(c), in which case such liability would not be subject to the requirements of Declaration 133. For example, if the obligation is exclusively vital (d.b. depending on the survival of a given person, in which case payments are only made if the person is alive on the due date of the payments), that obligation would be eligible for the exception referred to in point (c) of paragraph 10. This conclusion is consistent with the guidelines for Question 4 of Statement 133 Implementation Question #133. B25, “Deferred variable retirement contracts with payment alternatives at the end of the savings period.” If the responsibility of the NFP organisation for its obligation under the split interest agreement is not eligible for the derogation in paragraph 10(c) because the agreement is not exclusively vital, the NFP organisation shall determine whether that liability as a whole corresponds to the definition of a derivative in accordance with paragraph 6 or whether it contains an incorporated derivative instrument that could justify separate recognition in accordance with paragraph 12; unless a fair value election is made in accordance with the statement. 155. Revocable split-interest agreements are only startles and should not be recognised as a contribution unless they are legally enforceable. Contributions received by not-for-profit organizations under irrevocable split interest agreements should generally be measured at fair value when they are obtained. In October 2011, the AICPA Financial Reporting Executive Committee and the Fair Value Task Force for non-profit companies published the “Financial Reporting Whitepaper: Measurement of Fair Value for Certain Transactions of Non-for-Profit Entities”, which discusses different techniques for evaluating split-interest agreements. Under the standard, a government that receives resources under an irrevocable split interest agreement is required to account for assets, debts, and deferred inflows of funds at the beginning of the agreement.
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