FASB clarifies accounting for grants and contributions

Written by promotiondept

November 13, 2018

FSB clrfes ccountng for grnts nd contrbutons

FSB ssued n ccountng Stndrds Updte (SU) clrfyng wh trnsfer of csh or other ssets receved nd mde, prmrly by forprofts, qulfes s contrbuton or n exchnge trnscton.

The SU, whch mds FSB SC Topc 958, -for-Proft ttes, up currt gudnce bout whether trnsfer of ssets — or the ucton, settlemt, or cncellton of lbltes — should be ccounted for s contrbuton or n exchnge trnscton. Specfclly, the SU estblshes crter for determnng whether the sset provder s recevng commsurte vlue n return for those ssets. Tht determnton th dcttes whether the orgnzton follows contrbuton gudnce or exchnge trnscton gudnce found n the revue recognton nd other pplcble stndrds.

The new gudnce s expected to be prtculrly helpful n the ccountng for grnts nd smlr contrcts wrded by governmts to forprofts. FSB proposed the chnges lst yer fter recevng feedbck tht forprofts hd run nto dffculty decdng whether to chrcterze grnts s exchnges or contrbutons.

The SU lso provdes n hnced frme for determnng whether contrbuton s condtonl or uncondtonl, nd for dstngushng donormposed condton from donormposed restrcton.

The new stndrd does pply to trnsfers of ssets from governmts to busnesses. The updte ncludes extsve nstructons on effectve , whch rnge from June 5, 208, to Dec. 5, 209.

n ddton, FSB:



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