Proposed Improvements to Disclosures About Government Assistance
On November 12, 2015, the Financial Accounting Standards Board proposed updating generally accepted accounting principles to provide explicit disclosure guidance about foreign and domestic government assistance arrangements. In addition to tax-related assistance, government assistance arrangements include grants, low-interest-rate loans, loan guarantees or the transfer of assets from governments to businesses.
A newly proposed Accounting Standards Update (ASU), Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, requires entities to disclose the types of government assistance arrangements into which they have entered, the method used to account for them and their effect on the entity’s financial statements. Entities also would need to disclose in annual financial statements the significant terms and conditions of legally enforceable agreements, including commitments and contingencies, as well as government assistance received but not recognized directly in the financial statements, e.g., the benefit of a loan guarantee. No interim disclosures would be required.