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FASB clarifies how not-for-profits and others account for grants and similar transactions

Defining Issues | June 2018

KPMG reports on the FASB’s ASU that clarifies how not-for-profits and others account for grants and similar transactions. The ASU addresses practice issues by helping an entity evaluate whether it should account for a grant or similar contract as a contribution or as an exchange transaction.


ASU 2018-08

  • All entities that receive or make contributions, which primarily are not-for-profit entities, including healthcare entities.

Relevant dates

DatesRecipient transactions (revenue)Resource provider transactions (expense)
Effective date:Public*All other entitiesPublic*All other entities
Annual periods – Fiscal years beginning afterJune 15, 2018December 15, 2018December 15, 2018December 15, 2019
Interim periods – In fiscal years beginning afterJune 15, 2018December 15, 2019December 15, 2018December 15, 2020

*Public: Public NFPs and public business entities

Key Impacts:

  • Some grants that are considered exchange transactions under current US GAAP will be accounted for as conditional contributions
  • Some grants that are considered contributions with no donor-imposed conditions under current US GAAP will be considered conditional
  • The ASU is intended to reduce diversity in practice and enhance comparability among entities

Report contents

  • Applicability
  • Key facts and impacts
  • Analyzing transactions under the ASU
  • Determining whether a transaction is a contribution or an exchange transaction
  • Determining whether a contribution is conditional
  • Indicators of a barrier to entitlement
  • Some judgment still required
  • Disclosures about conditional promises to give
  • Effective dates and transition

Download the document:

FASB clarifies accounting for grants

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