United States

Changes to accounting for grants and contributions made and received

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In June 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. This ASU clarifies the guidance presented in Topic 958, “Not-for-Profit Entities,” of the FASB’s Accounting Standards Codification (ASC) for evaluating whether a transaction is reciprocal (i.e., an exchange transaction) or nonreciprocal (i.e., a contribution) and for distinguishing between conditional and unconditional contributions. The ASU also clarifies the guidance used by entities other than not-for-profits to identify and account for contributions made. To assist in understanding the clarifications made by ASU 2018-08, we have prepared a white paper, Changes to accounting for grants and contributions made and received. The white paper includes the following:

  • An overview of the clarifications made by the ASU
  • An overview of its effective dates (some of which are fast approaching) and transition provisions
  • The flowchart in ASC 958-605-55-1A, which summarizes the thought process that resource recipients should use in accounting for resources received
  • The flowchart in ASC 958-720-55-1A, which summarizes the thought process that resource providers should use in accounting for resources provided (which addresses both not-for-profit and other resource providers)

The white paper also provides a summary of the opportunity and challenge that the implementation of ASU 2018-08 represents.

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