Defining Issues   |   June 2018
 

FASB clarifies how not-for-profits and others account for grants and similar transactions

KPMG reports on the FASB’s ASU that clarifies how not-for-profits and others account for grants and similar transactions. The ASU addresses practice issues by helping an entity evaluate whether it should account for a grant or similar contract as a contribution or as an exchange transaction.

Applicability

ASU 2018-08

  • All entities that receive or make contributions, which primarily are not-for-profit entities, including healthcare entities.

Relevant dates

Dates

Recipient transactions (revenue)

Resource provider transactions (expense)

Effective date:

Annual periods – Fiscal years beginning after

Interim periods – In fiscal years beginning after

Public*

June 15, 2018

June 15, 2018

All other entities

December 15, 2018

December 15, 2019

Public*

December 15, 2018

December 15, 2018

All other entities

December 15, 2019

December 15, 2020

*Public: Public NFPs and public business entities

Key impacts

  • Some grants that are considered exchange transactions under current US GAAP will be accounted for as conditional contributions
  • Some grants that are considered  contributions with no donor-imposed conditions under current US GAAP will be considered conditional
  • The ASU is intended to reduce diversity in practice and enhance comparability among entities

Report Contents

  • Applicability
  • Key facts and impacts
  • Analyzing transactions under the ASU
  • Determining whether a transaction is a contribution or an exchange transaction
  • Determining whether a contribution is conditional
  • Indicators of a barrier to entitlement
  • Some judgment still required
  • Disclosures about conditional promises to give
  • Effective dates and transition

 

 

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