Accounting for Government Grants
Last updated on November 7, 2023. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
The objective of this project is to develop guidance for the recognition, measurement, and presentation of government grants to business entities.
In response to feedback received on the 2021 ITC, FASB Chair added a project, Accounting for Government Grants, Invitation to Comment, to the research agenda in December 2021. The purpose of the research project was to solicit additional feedback on whether certain requirements in IAS 20 related to the accounting for government grants should be incorporated into GAAP. On November 1, 2023, the Board added a project to its technical agenda to create recognition, measurement, and presentation requirements for business entities that receive government grants.
The Board decided to add a project to its technical agenda on the accounting for the recognition, measurement, and presentation of government grants received by business entities. The project would apply to all business entities.
Scope
The Board decided that the scope would include transfers of monetary and tangible nonmonetary assets from a government to a business entity, including forgivable loans.
The Board also decided to specify that the scope would exclude exchange transactions, including transactions with a government that are within the scope of Topic 606, Revenue from Contracts with Customers, and Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets. The scope would also exclude items accounted for under Topic 740, Income Taxes, as well as below-market interest rate loans and government guarantees.
Recognition, Measurement, and Presentation
The Board decided that a government grant should be recognized when it is probable that (1) the entity will comply with the conditions of the grant and (2) the grant will be received.
Grants Related to Income
The Board decided that a government grant related to income (that is, a government grant other than a grant related to assets) should be recognized in the income statement in the periods in which the entity incurs the grant-related costs.
The Board decided to require presentation of the grant on the balance sheet as deferred income and on the income statement, separately, as a credit balance in the related income statement category.
Grants Related to Assets
The Board decided that a government grant related to assets (that is, a monetary grant for the acquisition or construction of an asset as well as a grant of a nonmonetary asset) should be recognized as part of the cost of the asset (that is, a cost-accumulation approach).
Statement of Cash Flows
The Board decided that cash flows from government grants should be presented on the basis of the principles in Topic 230, Statement of Cash Flows.
Disclosure
The Board decided that entities that have government grants within the scope of this project would apply the applicable disclosures in Topic 832, Government Assistance. The Board also agreed to consider additional disclosures that may be decision useful at a future meeting.
A summary of decisions reached to date can be found here.
Last updated on November 7, 2023. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Objective:
The objective of this project is to develop guidance for the recognition, measurement, and presentation of government grants to business entities.
Background:
In response to feedback received on the 2021 ITC, FASB Chair added a project, Accounting for Government Grants, Invitation to Comment, to the research agenda in December 2021. The purpose of the research project was to solicit additional feedback on whether certain requirements in IAS 20 related to the accounting for government grants should be incorporated into GAAP. On November 1, 2023, the Board added a project to its technical agenda to create recognition, measurement, and presentation requirements for business entities that receive government grants.
Exposure Draft(s):
On June 13, 2022, the Board issued Invitation to Comment—Accounting for Government Grants by Business Entities: Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into Generally Accepted Accounting Principles. The due date for comment letters was September 12, 2022.- Download the Invitation to Comment—Accounting for Government Grants by Business Entities: Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into Generally Accepted Accounting Principles.
- Read comment letters on the Invitation to Comment.
There are no media releases or educational materials at this time.
Decisions Reached at Last Meetings (November 1, 2023):
The Board decided to add a project to its technical agenda on the accounting for the recognition, measurement, and presentation of government grants received by business entities. The project would apply to all business entities.
Scope
The Board decided that the scope would include transfers of monetary and tangible nonmonetary assets from a government to a business entity, including forgivable loans.
The Board also decided to specify that the scope would exclude exchange transactions, including transactions with a government that are within the scope of Topic 606, Revenue from Contracts with Customers, and Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets. The scope would also exclude items accounted for under Topic 740, Income Taxes, as well as below-market interest rate loans and government guarantees.
Recognition, Measurement, and Presentation
The Board decided that a government grant should be recognized when it is probable that (1) the entity will comply with the conditions of the grant and (2) the grant will be received.
Grants Related to Income
The Board decided that a government grant related to income (that is, a government grant other than a grant related to assets) should be recognized in the income statement in the periods in which the entity incurs the grant-related costs.
The Board decided to require presentation of the grant on the balance sheet as deferred income and on the income statement, separately, as a credit balance in the related income statement category.
Grants Related to Assets
The Board decided that a government grant related to assets (that is, a monetary grant for the acquisition or construction of an asset as well as a grant of a nonmonetary asset) should be recognized as part of the cost of the asset (that is, a cost-accumulation approach).
Statement of Cash Flows
The Board decided that cash flows from government grants should be presented on the basis of the principles in Topic 230, Statement of Cash Flows.
Disclosure
The Board decided that entities that have government grants within the scope of this project would apply the applicable disclosures in Topic 832, Government Assistance. The Board also agreed to consider additional disclosures that may be decision useful at a future meeting.
Tentative Board Decisions Reached to Date (as of November 1, 2023):
A summary of decisions reached to date can be found here.
The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
| November 1, 2023* | Board Meeting—The Board decided to add a project to its technical agenda on the accounting for the recognition, measurement, and presentation of government grants received by business entities. The Board discussed potential scope, recognition, measurement, presentation, and disclosure requirements for guidance on the accounting for government grants |
The staff will continue outreach and meet with the Board to finish initial deliberations at a future meeting.
Elizabeth Gagnon
Supervising Project Manager
eagagnon@fasb.org
Jennifer Kimmel
Practice Fellow
jkimmel@fasb.org
Adam Thurman
Practice Fellow
athurman@fasb.org
Luke Kennedy
Postgraduate Technical Assistant
lkennedy@fasb.org
Samuel Yang
Postgraduate Technical Assistant
syang@fasb.org
Supervising Project Manager
eagagnon@fasb.org
Jennifer Kimmel
Practice Fellow
jkimmel@fasb.org
Adam Thurman
Practice Fellow
athurman@fasb.org
Luke Kennedy
Postgraduate Technical Assistant
lkennedy@fasb.org
Samuel Yang
Postgraduate Technical Assistant
syang@fasb.org
The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.