The Financial Accounting Standards Board (FASB) has issued an Accounting Standards Update (ASU) providing official guidance on accounting for government grants that business entities receive.
This update offers detailed instructions on recognising, measuring, and presenting guidance for the grants, and is applicable to business entities other than not-for-profit organisations and employee benefit plans.
The ASU’s amendments provide a definition of government grants and provide clarification of their scope.
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FASB’s update outlines the criteria that must be met for recognition, and it also includes disclosure requirements.
These requirements include information about the nature of the grants received, the applied accounting policies, and any significant terms or conditions.
FASB chair Richard Jones said: “During the more than 50 years that the FASB has existed, there has been a lack of authoritative GAAP guidance on how to account for government grants received by business entities.
“The new ASU adds guidance in an area where stakeholders have consistently highlighted a need for it, benefitting both preparers and investors.”
FASB released an ASU last month that expands the scope of hedge accounting. This update addresses five key areas, enabling companies to use hedge accounting in more cases where “highly effective” economic hedges are present.
In November 2025, FASB issued a post-implementation review report for its leases standard, expressing concerns over ongoing expenses.
The board said at that time that, although the main goal of the standard was met, the costs for lessees to initially implement and then continue applying the requirements were much higher than FASB had expected when the standard was first issued.
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