June 6, 2024
Current Projects at FASB
Project Summary
In response to feedback received on the 2021 Invitation to Comment, Agenda Consultation (ITC), the 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, Accounting for Government Grants and Disclosure of Government Assistance, related to the accounting for government grants should be incorporated into generally accepted accounting principles (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.
Current Status
The Board discussed disclosures, accounting for government grants in a business combination, transition, benefit-cost analysis, and comment period for a proposed Accounting Standards Update. The Board reached the following decisions on those issues.
Disclosures
The Board decided that an entity should be required to provide the disclosures in Topic 832, Government Assistance, for government grants within the scope of this project. The Board decided that an entity should provide the disclosures in Topic 832 for annual reporting periods.
The Board decided that:
- A business entity should be required to disclose the fair value of grants of tangible nonmonetary assets in the period in which the grant is recognized.
- For grants related to assets that are accounted for using a cost-accumulation approach, a business entity would not be required to disclose the line items on the balance sheet and income statement that are affected by the grant, and the amounts applicable to each financial statement line item in the current reporting period.
Recognition and Measurement in a Business Combination
The Board decided to provide specific guidance about whether and how to recognize and measure grant-related liabilities in a business combination.
Transition and Transition Disclosures
The Board decided that a business entity could elect to apply the amendments either (1) prospectively to grants that either are not completed as of the effective date or are entered into after the effective date or (2) retrospectively.
A business entity that elects to apply the amendments prospectively is required to disclose the nature of and reason for the change in accounting principle. A business entity that elects to apply the amendments retrospectively is required to provide the disclosures in Topic 250, Accounting Changes and Error Corrections, in the period of adoption.
Analysis of Benefits and Costs
The Board concluded that it has received sufficient information and analysis to make an informed decision on the expected costs and expected benefits of the amendments in the proposed Update and that the expected benefits of those amendments would justify the expected costs.
Tentative Board Decisions Reached to Date (as of June 4, 2024):
Next Steps
The Board directed the staff to proceed to drafting a proposed Accounting Standards Update for vote by written ballot. The Board also decided on a 90-day comment period for the proposed Update.