Objective:

This objective of this research project is to solicit broad stakeholder feedback on whether certain recognition, measurement, and presentation requirements in IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, as it relates to government grants, should be incorporated into Generally Accepted Accounting Principles (GAAP).
 

Background:

GAAP does not provide specific authoritative guidance on how business entities should recognize, measure, and present grants received from a government. In the absence of specific guidance, many but not all business entities analogize to the guidance in IAS 20. Stakeholders have observed that the lack of specific guidance on the recognition and measurement of government grants has created diversity in practice.

Because of the lack of specific topical authoritative guidance on how business entities should account for a grant received from the government, the FASB considered whether to add a project on the accounting for government grants in 2014, but ultimately decided to add a project to its agenda that focused on developing disclosure requirements for the broader category of government assistance.

In 2021, the Board issued Accounting Standards Update 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in Update 2021-10 require business entities to disclose the following information in annual reporting periods for transactions with a government that are accounted for by applying a grant or a contribution accounting model by analogy:

1. Information about the nature of the transactions and the related accounting policy used to account for the transactions
2. The line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item
3. Significant terms and conditions of the transactions, including commitments and contingencies.

Those disclosures are generally consistent with the disclosures in IAS 20, but also require entities to disclose the balance sheet and income statement line items (and applicable amounts) that are affected by transactions with a government. That information is not explicitly required by IAS 20.

Even with the disclosure requirements established in Update 2021-10, the lack of specific guidance has continued to be highlighted as an area for potential improvement by stakeholders following the significant increase in government grants as part of the global response to the COVID-19 pandemic.

In June 2021, the FASB issued the Invitation to Comment, Agenda Consultation (2021 ITC). As part of that process, the 2021 ITC asked stakeholders whether the Board should pursue a project on the recognition and measurement of government grants and, if so, whether the Board should leverage an existing grant or contribution accounting model (such as the model in IAS 20 or Subtopic 958-605) or develop a new accounting model. In addition, the 2021 ITC asked stakeholders what types of government grants should be included within the scope of a potential project.

In response to feedback received on the 2021 ITC, the FASB Chair added a project, Accounting for Government Grants, Invitation to Comment, to the research agenda in December 2021. The research project is focused solely on the accounting for government grants as it is included in IAS 20 and not the broader category of government assistance that is included in IAS 20.

Invitation to Comment (ITC):

On June 13, 2022, the FASB staff issued the Invitation to Comment (ITC), 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 is September 12, 2022.

• Download the ITC

• Read the press release on the ITC

There are no Board decisions at this time.

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.

There are no Board meeting minutes at this time.

The Board will consider comment letter feedback on the Invitation to Comment.

Elizabeth Gagnon
Supervising Project Manager
eagagnon@fasb.org

Richard Gabriel
Assistant Project Manager
rgabriel@fasb.org

Matt Nordhoff
Postgraduate Technical Assistant
mnordhoff@fasb.org