FASB Proposes New Guidance on Accounting for Government Grants by Business Entities

FASB Proposes New Guidance on Accounting for Government Grants by Business Entities

By Ez-XBRL Team 22 January, 2025
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22 January 2025

The Financial Accounting Standards Board (FASB) has released a proposed Accounting Standards Update (ASU) titled “Government Grants (Topic 832): Accounting for Government Grants by Business Entities.” This proposal aims to establish authoritative guidance for businesses on the recognition, measurement, presentation, and disclosure of government grants, filling a gap in U.S. Generally Accepted Accounting Principles (GAAP).

Key Features of the Proposed ASU:

  • Comprehensive Framework: The update provides businesses with a consistent method for accounting for government grants, reducing diversity in practice.
  • Recognition and Measurement: Clear criteria are proposed to determine when and how government grants should be recognized in financial statements.
  • Presentation and Disclosure: Enhanced disclosure requirements are outlined to ensure transparency and help stakeholders better understand the financial impact of government grants.

The proposal aligns with FASB’s commitment to improving financial reporting and addressing stakeholder feedback about the need for clear and consistent guidance in this area.

Stakeholder Input Invited

FASB is inviting comments on the proposed ASU from stakeholders, including businesses, investors, and auditors, to ensure the final guidance meets the needs of its users. The comment period is open until March 31, 2025.