In our letter responding to the FASB’s proposed guidance on accounting for government grants, we support the Board’s objective to establish authoritative guidance for business entities to recognize, measure, and present government grants and acknowledge the lack of specific guidance, which has resulted in diversity in practice and prompted questions about acceptable accounting approaches in the past.
However, we ask the Board to exclusively permit a single approach to account for government grants—the proposed deferred income approach (that is, gross balance sheet presentation)—and to require gross presentation in the income statement. We believe that the cost accumulation approach (that is, net balance sheet presentation) and net presentation in the income statement would present a variety of issues and obscure the true economic impact of government grants, which we discuss in detail in our letter.
Download our letter here.
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