The Financial Accounting Standards Board’s ASU 2025-10 introduces authoritative guidance for accounting for government grants received by business entities—a first for U.S. GAAP. Historically, companies relied on analogies to IAS 20 or not-for-profit models, creating diversity in practice. This update aligns U.S. GAAP with international standards, enhancing transparency and comparability.
Under ASU 2025-10, a grant is recognized only when it is probable that the entity will (1) comply with the grant’s conditions and (2) receive the funds. For income-related grants, amounts may be presented as other income or as a reduction of the related expense.
Effective Date:
- Public business entities: Annual periods beginning after December 15, 2028 (including interim periods).
- All other entities: One year later, after December 15, 2029.
- Early adoption permitted
For additional details on ASU 2025-10 or questions about your grants, please reach out to the Dean Dorton Life Science Team.
