New Developments Summary: FASB clarifies contribution accounting

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Many not-for-profit entities (NPFs) that receive government grants or enter into similar contracts with public bodies have reported some difficulty determining if those obligations are contributions or exchange transactions, and whether they are condition or unconditional. This has resulted in NPFs using a variety of accounting methods for grants and contracts.

To address this, an FASB project was started to assist NPFs in distinguishing contributions (nonreciprocal transactions) within the scope of ASC 958, Not-for-Profit Entities, from exchanges (reciprocal transactions) subject to other guidance, like ASC 606, Revenue from Contracts with Customers.

The result of the project is ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. Grant Thornton’s New Developments Summary thoroughly reviews this FASB standard and shows how it helps clarify NPF accounting methods.


Carolyn WargerCarolyn Warger
Senior Manager
Accounting Principles Group
T +1 617 848 4838