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
- 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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