Defining Issues | August 2017

 

 

FASB proposes to clarify how not-for-profits and others account for grants and similar transactions

KPMG reports on the FASB’s proposal to clarify how not-for-profits and others account for grants and similar transactions. The proposed ASU would address practice issues by helping entities evaluate whether they should account for a grant or similar contract as a contribution or an exchange transaction.

Applicability

Proposed ASU on ASC 958

  • Not-for-profit entities, including healthcare entities
  • Entities that receive or make contributions of cash or other assets

Relevant dates

  • August 3, 2017 – FASB issued proposed ASU
  • November 1, 2017 – Comments due on proposed ASU

Mandatory effective dates and early adoption provisions:



Effective date:

 

Annual periods – Fiscal years beginning after

Interim periods – In fiscal years beginning after

Early adoption allowed?


Public business entities and certain NFPs*:

December 15, 2017
 

December 15, 2017
 

Yes


All other entities
 

Dec. 15, 2018


Dec. 15, 2019


Yes

* NFPs that have issued, or are conduit bond obligors for, securities that are traded, listed or quoted on an exchange or an over-the-counter market


Key impacts

  • Some grants that are considered exchange transactions today would be accounted for as conditional contributions
  • Some grants that are considered unconditional contributions under current US GAAP would be considered conditional
  • The proposed ASU is intended to reduce diversity in practice and enhance comparability among entities

Report contents

  • Applicability
  • Key facts and impacts
  • Analyzing transactions under the proposed ASU
  • Determining whether a transaction is a contribution or an exchange transaction
  • Determining whether a transaction is a payment from a third-party payer
  • Determining whether a contribution is conditional
  • Indicators of a barrier to entitlement
  • Effective dates and transition

 

 

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