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FASB proposes new grant accounting rules

The FASB has proposed a new accounting standards update to provide guidance on how business entities should account for government grants. Currently, U.S. GAAP lacks specific rules, leading many businesses to rely on IAS 20 by analogy. The proposed update aims to reduce variability in accounting practices by incorporating IAS 20 with targeted improvements. Jackson Day, the FASB’s technical director, emphasized that “It will not be a cut and paste of IAS 20,” highlighting that the scope and recognition thresholds will differ. The update will clarify how to recognize, measure, and present government grants, including those related to assets and income, and will require disclosures about the nature and terms of the grants. FASB is seeking comments on the proposal by March 31st 2025.

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