Because U.S. GAAP historically lacked authoritative accounting guidance for business entities receiving government grants, the FASB issued ASU 2025-10 to fill that void. The new amendments should be applied in addition to the current requirements issued in ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which provided disclosure requirements for government grants but no guidance for their recognition or measurement.
The new ASU leverages the guidance in International Accounting Standards (IAS) 20, which is the accounting framework most business entities currently use by analogy. The new guidance clearly defines a “government grant” and outlines requirements for recognizing and measuring a grant on the balance sheet and income statement—requirements that vary depending on whether the grant relates to an asset or to income. The new guidance also gives entities the option to present grants either gross or net on the income statement and balance sheet.
The amendments in the ASU are effective for public business entities beginning in 2029 and the year after for other entities. Entities may elect to apply the transition guidance using either a modified prospective approach, a modified retrospective approach, or a full retrospective approach, which are detailed in our publication.
To read more, download Snapshot 2026-12 (PDF - 389.78KB).
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Graham Dyer serves as Grant Thornton LLP’s Chief Accountant. In this role, he leads the firm’s national Accounting Principles Group, which is responsible for Grant Thornton’s interpretation of accounting matters in both US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS).
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