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FASB project on government grants

Defining Issues | June 2024

The FASB discusses a model for business entities to account for government grants.


As more business entities receive government grants, how to recognize, measure and present these grants has become a more prevalent issue. The limited US GAAP on accounting for government grants has led to diversity in practice.


  • FASB project: Accounting for government grants
  • Business entities that receive government grants

Relevant dates

November 2021: The FASB issued ASU 2021-10, Disclosures by Business Entities about Government Assistance.

June 2022: The FASB sought stakeholder feedback on Accounting for Government Grants via an Invitation to Comment, with comments due by September 12, 2022.

November 1, 2023: The FASB added a project to its technical agenda on the accounting for government grants by business entities and began initial deliberations.

April 3, 2024: The FASB decided to pursue an IAS 20 accounting model, with targeted improvements to that model’s scope and recognition threshold based on previous Board decisions.

June 4, 2024: The FASB discussed disclosures, accounting for government grants in a business combination, transition, and the comment letter period of a proposed ASU.

Key impacts

US GAAP prescribes a contribution model for not-for-profit entities in the scope of ASC 958 to account for government grants but does not contain specific guidance for business entities receiving government grants. This lack of guidance has led to diversity in practice and has left business entities to analogize to other GAAP or IFRS® Accounting Standards.

Many business entities account for their government grants by analogy to the grant model under IFRS® Accounting Standards – specifically IAS 20 (government grants and government assistance). Others analogize to the not-for-profit contribution model under ASC 958-605.

In November 2021, the FASB issued ASU 2021-10, which created ASC 832 (government assistance). This ASC requires business entities to disclose information about certain government assistance they receive but does not contain guidance on recognition, measurement or presentation.

In June 2022, the FASB sought feedback from stakeholders through an Invitation to Comment on whether to incorporate the recognition, measurement and presentation guidance on accounting for government grants in IAS 20 into US GAAP.

After adding the project to its research agenda and engaging in the Invitation to Comment and other stakeholder outreach, the FASB met on November 1, 2023 to refine the project’s scope and discuss recognition, measurement, presentation and disclosure. The FASB noted throughout the meeting the importance of developing guidance that is operable and decision-useful to investors.

At its April 3, 2024 meeting, the FASB decided to pursue an IAS 20 accounting model, with targeted improvements to scope and recognition threshold based on previous Board decisions. It also decided to include some implementation guidance for the areas that will differ from IAS 20.

In its most recent meeting on June 4, 2024, the FASB discussed disclosures, accounting for government grants in a business combination, transition, and the comment letter period of a proposed ASU.

The following are key highlights from the tentative decisions reached on the project to date:

Project scope


The FASB decided to develop an accounting model using the main principles in IAS 20. The Board confirmed that the guidance in this project will apply to both public and private business entities.

Scope - definition of a government grant

The FASB defined a government grant as assistance by a government in the form of transfers of monetary and tangible nonmonetary assets to a business entity. The project’s scope would include forgivable loans.

Scope exclusions

The project’s scope excludes:

  • exchange transactions in the scope of ASC 606 (revenue from contracts with customers) or ASC 610-20 (gains and losses from derecognition of nonfinancial assets);
  • items accounted for under ASC 740 (income taxes);
  • below-market interest rate loans; and
  • government guarantees.


The FASB tentatively agreed that the threshold to recognize government grants should be ‘probable’, consistent with ASC 606 and ASC 450-20 (loss contingencies).

The Board clarified that an entity would recognize a government grant when it is probable:

  • the entity will comply with the conditions attached to the grant; and
  • the grant will be received. 


The FASB tentatively agreed to amend the scope of ASC 832 to include government grants that are in the scope of this project and require these disclosures for annual periods.

The Board decided to require disclosure of the fair value of tangible nonmonetary assets in the period the grant is recognized. For grants related to assets accounted for under a cost-accumulation model (i.e. the grant is recorded as a reduction of the asset’s cost), the ASC 832 disclosures of the balance sheet and income statement line items affected by the grant and the amounts applicable to each financial statement line item in the reporting period will not be required.


The new guidance will be adopted on a prospective basis to government grants that are either (i) not completed as of the effective date or (ii) entered into after the effective date. Retrospective application will be permitted. Transition disclosures will be required.

Additional decisions

The FASB decided to provide guidance on accounting for government grant-related liabilities assumed in a business combination.

Next steps

The Board directed the staff to draft a proposed ASU with a 90-day comment period.

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Partner, Dept. of Professional Practice, KPMG U.S.
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