IMA FRC comment letter in response to proposed ASU on accounting for government grants by business entities

March 27, 2025

IMA’s Financial Reporting Committee (the Committee) issued a comment letter to share its views on the Financial Accounting Standards Board’s Proposed Accounting Standards Update, Accounting for Government Grants by Business Entities.

The Committee expressed that it believes the proposed guidance will increase consistency in both the timing of recognition of government grants and the financial statement disclosures on government grant accounting. However, while the Committee believes the proposed accounting is generally clear and operable, its requested further clarify on the concept of identifying a primary condition, potential recognition of grants before the related expenditures have been incurred, and the example provided on allocation of government grants. It also suggested providing more guidance on the statement of cash flows treatment to reduce potential diversity in practice.