Clarifying terms & concepts in ASU 2021-10 and ASU 2018-08

A careful reading and clear understanding of relevant authoritative literature is critical to help ensure financial statement preparers, and in turn their auditors, are associated with representationally faithful U.S. generally accepted accounting principles (U.S. GAAP) financial statements. Some practitioners are unclear about certain terms and concepts in Accounting Standards Update (ASU) 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, and ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. This report provides selected clarifications to those ASUs, specifically the terms “government” and “grant,” as well as the concept of a “barrier” related to conditional contributions.