On Dec. 4, FASB released an Accounting Standards Update (ASU) creating authoritative guidance on the accounting for government grants received by business entities, according to a release from the board.

“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,” noted FASB Chair Richard R. Jones. “The new ASU adds guidance in an area where stakeholders have consistently highlighted a need for it, benefitting both preparers and investors.”

The ASU amendments offer recognition, measurement, and presentation guidance for government grants that business entities receive. They apply to business entities—specifically, all entities except for not-for-profit entities and employee benefit plans—that get a government grant.

The ASU amendments also result in the following:

• Define government grants while clarifying their scope

• Create recognition criteria

• Cover disclosure requirements on the nature of government grants, accounting policies applied, and significant terms and conditions.

FASB also stated that the ASU—including transition and effective date information—is available at www.fasb.org