The FASB has introduced a proposed Accounting Standards Update (ASU) to provide clear guidance on how businesses should account for government grants.
Currently, U.S. Generally Accepted Accounting Principles (GAAP) lack specific rules in this area, prompting many entities to turn to the International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, as a reference.
The update will clarify how to recognize, measure and present government grants, including those related to assets and income, and will require disclosures about the nature and terms of the grants. FASB is seeking comments on the proposal by March 31, 2025. Read more.