FASB proposes accounting guidance for government grants
Defining Issues | November 2024
The proposed ASU introduces an accounting model for business entities to account for government grants.
The proposed ASU provides guidance on how business entities should recognize, measure and present government grants received. The proposal aims to reduce diversity in practice and increase consistency in accounting among business entities.
Applicability
- Proposed ASU
- Business entities that receive government grants
Relevant dates
- Exposure draft issued November 19, 2024
- Comments due March 31, 2025
Key impacts
The following are key proposals of the ASU:
- Prescribe an accounting model based on the main principles in IAS 20 (government grants and government assistance), with targeted revisions to areas such as scope and the recognition threshold.
- Define a government grant as a transfer of a monetary or a tangible nonmonetary asset, other than an exchange transaction, from a government to a business entity.
- Provide a recognition threshold under which a grant would be recognized when it is probable that the entity will comply with the grant’s conditions and that the grant will be received.
- Leverage existing disclosure requirements in ASC 832 for annual periods.
- Create specific recognition and measurement guidance in ASC 805 for certain government grant-related liabilities assumed in a business combination.
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Resource
FASB approves new disclosures for government assistance
KPMG reports on ASU 2021-10, requiring new annual disclosures for entities receiving government assistance.
Resource
Government assistance disclosures
We answer implementation questions on the new government assistance disclosure requirements in ASC 832 and ASU 2021-10.
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