The Financial Accounting Standards Board issued a proposed accounting standards update Tuesday to establish authoritative guidance on the accounting for government grants received by business entities. 

U.S. GAAP currently doesn’t provide specific authoritative guidance about the recognition, measurement, and presentation of a grant received by a business entity from a government. Instead, many businesses currently apply the International Financial Reporting Standards Foundation’s International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy, at least in part, to account for government grants.

In 2022 FASB issued an Invitation to Comment, Accounting for Government Grants by Business Entities—Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into GAAP. In response, most of FASB’s stakeholders supported leveraging the guidance in IAS 20 to develop accounting guidance for government grants in GAAP, believing it would reduce diversity in practice because entities would apply the guidance instead of analogizing to it or other guidance, thus narrowing the variability in accounting for government grants.

Patrick Dorsman/Financial Accounting Foundation

The proposed ASU would leverage the guidance in IAS 20 with targeted improvements to establish guidance on how to recognize, measure, and present a government grant including (1) a grant related to an asset and (2) a grant related to income. It also would require, consistent with current disclosure requirements, disclosure about the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant, among others.

FASB is asking for comments on the proposed ASU by March 31, 2025.

“It will not be a cut and paste of IAS 20,” said FASB technical director Jackson Day during a session at Financial Executives International’s Current Financial Reporting Insights conference last week. “First of all, the scope is going to be a little bit different, probably a little bit more narrow. Second of all, the threshold of recognizing a government grant will be based on ‘probable,’ and ‘probable’ as we think of it in U.S. GAAP terms. We’re also going to do some work to make clarifications, etc. There is a little bit different thinking around the government grants for assets. There will be a deferred income approach or a cost accumulation approach that you can pick. And finally, there will be different disclosures because the disclosures will be based on what the board had previously issued, but it does leverage IAS 20. A few other things it does as far as reducing diversity. Most people analogized IAS 20. That was our anecdotal findings. But what does that mean? How exactly do they do that? This will set forth the specifics. It will also eliminate from the population those that were analogizing to ASC 450 or 958, because there were a few of those too. So it will go a long way in reducing diversity. It will also head down a model that will be generally internationally converged, which we still think about. We still collaborate with the staff [of the International Accounting Standards Board]. We don’t have any joint projects, but we still do our best when it makes sense to align on projects.”

PwC made a $1.5 million investment to Bryant University, in Smithfield, Rhode Island, to fund the launch of the PwC AI in Accounting Fellowship.

The experiential learning program allows undergraduate students to explore AI’s impact in accounting by way of engaging in research with faculty, corporate-sponsored projects and professional development that blends traditional accounting principles with AI-driven tools and platforms. 

The first cohort of PwC AI in Accounting Fellows will be awarded to members of the Bryant Honors Program planning to study accounting. The fellowship funds can be applied to various educational resources, including conference fees, specialized data sheets, software and travel.

Krisztian Bocsi/Bloomberg

“Aligned with our Vision 2030 strategic plan and our commitment to experiential learning and academic excellence, the fellowship also builds upon PwC’s longstanding relationship with Bryant University,” Bryant University president Ross Gittell said in a statement. “This strong partnership supports institutional objectives and includes the annual PwC Accounting Careers Leadership Institute for rising high school seniors, the PwC Endowed Scholarship Fund, the PwC Book Fund, and the PwC Center for Diversity and Inclusion.”

Bob Calabro, a PwC US partner and 1988 Bryant University alumnus and trustee, helped lead the development of the program.

“We are excited to introduce students to the many opportunities available to them in the accounting field and to prepare them to make the most of those opportunities, This program further illustrates the strong relationship between PwC and Bryant University, where so many of our partners and staff began their career journey in accounting” Calabro said in a statement.

“Bryant’s Accounting faculty are excited to work with our PwC AI in Accounting Fellows to help them develop impactful research projects and create important experiential learning opportunities,” professor Daniel Ames, chair of Bryant’s accounting department, said in a statement. “This program provides an invaluable opportunity for students to apply AI concepts to real-world accounting, shaping their educational journey in significant ways.”

If the incoming Trump administration eliminates $7,500 federal tax credits for electric vehicles, that would mean the end of popular leases that allow U.S. consumers to sidestep restrictions on which EV models qualify for incentives.

President-elect Donald Trump’s transition team intends to revoke the tax credit for purchasing an EV, Reuters reported last week. Whether and when that could happen remains uncertain. A companion EV-leasing credit in the 2022 Inflation Reduction Act would have to be dealt with separately but is widely seen as vulnerable. So people hoping to acquire an electric car might want to act soon.

“If you’re on the fence, right now is probably going to be one of your better opportunities to buy or lease an EV at a good price, at least for a few years,” said Chris Harto, a senior policy analyst at Consumer Reports. “Some of the cheapest ways to get into an electric vehicle over the past year has been an EV lease.”

Megan Varner/Bloomberg

In October, leases accounted for 79% of EV sales at dealerships, according to Jessica Caldwell, executive director of insights at automotive research firm Edmunds.com Inc. “When you see the tax credit applied to a three-year lease combined with some of the generous incentives the automakers themselves are offering, the EV deals are pretty compelling,” she said.

This week, for instance, you can drive home a luxury electric BMW i4 for $460 a month, about the same price as leasing a middle-of-the-road gasoline Toyota Camry. Hyundai, meanwhile, is currently offering its sporty electric Ioniq 5 for $199 a month on a two-year lease.

Edmunds’ numbers don’t include automakers such as Tesla and Rivian that sell directly to consumers and that don’t release the percentage of their customers who opt for leases. 

The IRA limits the purchase tax credit to electric vehicles assembled in North America and requires a percentage of battery components and critical minerals to originate there or in countries that have signed a free-trade agreement with the U.S.

But the sticker price can’t exceed $55,000 for a car or $80,000 for an SUV, and only households earning up to $300,000 annually and individuals making up to $150,000 can claim the tax credit. EVs such as the Chevrolet Equinox, Honda Prologue and Volkswagen ID.4 get the green light, but if buyers have their eye on models like the Hyundai Ioniq 5 or a Polestar 2 — which aren’t assembled in North America and don’t meet the battery and critical mineral requirements — they’re out of luck.

Unless they lease. Those restrictions don’t apply to the federal government’s commercial clean vehicle credit program, which allows fleet owners like automakers’ finance arms to claim the tax credit. That lets manufacturers entice customers by passing on the $7,500 savings in the form of lower lease payments.

Caldwell said leasing is also attractive to prospective EV drivers worried about the risk of purchasing a $50,000 car only to have its technology become outdated while still owing payments. “We’ve also seen pretty heavy depreciation for electric vehicles, so if you lease you’re not left holding the bag if the vehicle declines rapidly in value after three years,” she said.

If the lease loophole is closed, “EVs are going to have to sell on their own merit, which we know is always tough when there is a new technology and people still have concerns about battery longevity, range and infrastructure,” said Caldwell.

Congress would need to pass legislation to kill the EV tax credits, according to Romany Webb, deputy director of the Sabin Center for Climate Change Law at Columbia University. But absent Congressional action, she said Trump could order the IRS to revamp its guidance on how they are used.

The agency “could, for example, revise the list of vehicles that are eligible for the tax credits or add new procedures for claiming the credits,” said Webb. “That could make it more practically challenging for people to take advantage of the credits and, generally, introduce a lot of uncertainty and confusion that could make people less willing to purchase or lease EVs.”

Consumers aren’t the only ones who would feel the impact if the credits are tightened or repealed. “These tax credits are for consumers, but they’re also really for automakers so that they can scale up the production of electric vehicles and can remain competitive,” said Harto. “So while repealing the tax credit will hurt consumers, it probably hurts automakers even more.”