The FASB has released an Accounting Standards Update (ASU) to provide clear guidance on the accounting for government grants received by business entities.
The update builds on previous guidance from 2021, addressing stakeholder requests for enhanced transparency.
"The new ASU adds guidance in an area where stakeholders have consistently highlighted a need for it, benefitting both preparers and investors," said FASB chair Richard Jones.
The amendments include specific disclosure requirements and recognition criteria for government grants, which are defined as transfers of monetary or nonmonetary assets from a government to a business entity.
The new rules will take effect for public entities after Dec. 15, 2028, and for other entities after Dec. 15, 2029. Read more.