Trout CPA Partner Nicole K. Cradic, CPA, recently authored an article for the Pennsylvania CPA Journal examining new Financial Accounting Standards Board guidance for businesses that receive government grants.
In “ASU 2025-10: Accounting for Government Grants,” Nicole discusses FASB Accounting Standards Update No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The new standard establishes authoritative U.S. GAAP guidance for recognizing, measuring, and presenting government grants received by business entities.
Historically, business entities had limited directly applicable U.S. GAAP guidance for accounting for government grants. ASU 2025-10 is intended to provide greater consistency in how these arrangements are accounted for and presented in financial statements.
In the article, Nicole highlights several important areas of the new guidance, including:
- When a business should recognize a government grant.
- Accounting options for grants related to assets, such as equipment or other capital investments.
- Accounting for grants intended to offset operating costs.
- How potential grant repayments should be treated.
- Transition and implementation considerations for businesses preparing to adopt the standard.
The accounting treatment selected for certain grants may also affect financial statement presentation and metrics such as depreciation, leverage, and EBITDA.
Public business entities are required to apply ASU 2025-10 for annual reporting periods beginning after December 15, 2028. For all other entities, the standard applies to annual reporting periods beginning after December 15, 2029. Early adoption is permitted.
Businesses that receive government assistance should begin evaluating their existing grant arrangements and consider how the new guidance could affect their accounting policies, financial reporting processes, and disclosures.
