How to Calculate Discount on Pledges Receivable: A Comprehensive Guide
Calculating discount on pledges receivable, a noun phrase that describes a financial accounting process, involves determining the reduction in the face value of a future cash inflow due to the present payment of a pledge or similar commitment. For instance, a non-profit organization may receive a pledge of $1,000, payable in one year. If the organization wants to recognize the pledge’s present value of $950 today, it must calculate the $50 discount on pledges receivable.