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Starting in fiscal year 2022, all entities \u2014 except nonprofit organizations in the scope of Topic\u00a0958, Not-for-Profit Entities<\/em>, and employee benefit plans \u2014 must provide detailed disclosures about government assistance. Here are the details of the new rules.<\/p>\n Defining government assistance<\/strong><\/p>\n The term \u201cgovernment assistance\u201d may refer to perks and other incentives policymakers provide to lure large companies to establish a business in their states. The goal of these incentives is to drive economic growth by boosting jobs for residents. However, government assistance can take many forms because there are many types of governments, related entities and enterprises authorized by governments to administer assistance for them.<\/p>\n Examples of government assistance transactions include grants of assets, tax assistance, low-interest-rate loans, loan guarantees and forgiveness of liabilities. The COVID-19 pandemic significantly increased the number of entities receiving assistance and the level of government funding provided.<\/p>\n Following new rules<\/strong><\/p>\n Accounting Standards Update (ASU) 2021-10, Government Assistance (Topic\u00a0832): Disclosures by Business Entities about Government Assistance<\/em>, was finalized in November\u00a02021. Previously, there were no explicit accounting rules for government incentives under U.S. Generally Accepted Accounting Principles (GAAP), leading to divergent practices.<\/p>\n The scope of ASU\u00a02021-10 is limited to transactions accounted for by applying a grant or contribution accounting model by analogy. It specifically excludes transactions accounted for under other GAAP, such as:<\/p>\n For instance, the new rules don\u2019t apply to Paycheck Protection Program loans provided under the CARES Act, if they\u2019re accounted for under Topic\u00a0470, Debt<\/em>.<\/p>\n Providing enhanced transparency<\/strong><\/p>\n Under the new rules, the following details must be disclosed about government assistance transactions:<\/p>\n The nature of the transactions and accounting policies used.<\/strong> This includes a general description and whether the assistance was received in cash or other assets.<\/p>\n Financial statement effects.<\/strong> You must disclose all balance sheet and income statement line items where the transactions were recorded and the amount of each line item.<\/p>\n Significant terms and conditions of the transactions.<\/strong> Examples include 1)\u00a0the agreement length, 2)\u00a0amounts to be received each year and whether they are fixed or variable, 3)\u00a0commitments made by the government and the entity, and 4)\u00a0whether the government can recapture any of the amounts and under what conditions.<\/p>\n If any disclosures aren\u2019t provided because of legal prohibitions on disclosing them, there should be a general description and indication of the legal restriction for the omitted disclosures.<\/p>\n We can help<\/strong><\/p>\n The new rules are effective for annual periods beginning after December\u00a015, 2021. But early application is permitted. Contact us for more information.<\/p>\n \u00a9 2022<\/em><\/p>\n <\/body> Starting in fiscal year 2022, all entities \u2014 except nonprofit organizations in the scope of Topic\u00a0958, Not-for-Profit Entities, and employee benefit plans \u2014 must provide detailed disclosures about government assistance. Here are the details of the new rules. Defining government assistance The term \u201cgovernment assistance\u201d may refer to perks and other incentives policymakers provide to […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,7,10],"tags":[8,11,12],"class_list":["post-15910","post","type-post","status-publish","format-standard","hentry","category-aa","category-articles","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15910","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=15910"}],"version-history":[{"count":0,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/15910\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=15910"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=15910"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=15910"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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