You’ve received government assistance from programs such as the Paycheck Protection Program (PPP) or the CARES Act – now you need to account for it.
Crowe CARES Act Reporting Tool
Without explicit U.S. GAAP guidance on how for-profit entities should account for government assistance, businesses are left to determine accounting policy based on relevant facts and circumstances.
You’ll need to consider assistance type – for example, loan, grant, contribution, or tax relief – as well as rules for forgiveness, conditions, and contingencies.
Only then can you begin to identify the appropriate accounting treatment for your PPP loan or government grant.
It's also important to know how each accounting policy affects your organization’s financial statements, covenants, and regulatory requirements.
U.S. GAAP guidance can be clear in some places – and confusing in many others. To figure out the right accounting policies for your loan or grant, you’ll need to think long and hard about the form and substance of the assistance.
First, consider if there is explicit guidance (ASC 740 for income tax credit), if the assistance represents an exchange transaction (ASC 606), or if accounting policy exists for similar forms of assistance.
For assistance not accounted for under these options, you’ll need to explore how well existing models align with the form and substance of your grant, loan, or tax relief. Some models that could apply:
Crowe professionals across service lines have deep knowledge of various government assistance programs, including recent COVID-19 relief programs such as the CARES Act, PPP, Main Street Lending Program, and others. Crowe has been on the forefront of understanding the accounting framework to be applied to these and other government assistance programs.
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