The AICPA has issued nonauthoritative guidance about how a recipient should account for a Shuttered Venue Operators Grant (SVOG) or a Restaurant Revitalization Fund (RRF) Grant issued under the Small Business Administration COVID-19 Relief Programs.
The Technical Question and Answer (TQA) applies to not-for-profit entities (which are eligible only for SVOG) and private business entities (which are eligible for both SVOG and RRF grants); publicly traded entities are not eligible for either of these grants.
Under the terms of both the SVOG and RRF grants, recipients are not required to repay the funding if funds are used for eligible uses by the dates specified by each respective program. According to this TQA, business entities might consider applying by analogy the following guidance to these grants: International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, FASB ASC 958-605, Not-for-Profit Entities — Revenue Recognition, or FASB ASC 450-30, Contingencies — Gain Contingencies. The TQA describes each of these accounting models in greater detail and how to select the appropriate model.
Nonprofit organizations should account for government grants in accordance with the "contributions received" subsections of FASB ASC 958-605. That model requires entities to first determine if a contribution is conditional or unconditional.
According to the TQA, the payments received under these grants would be considered conditional contributions and, thus, contribution revenue would be recognized only to the extent that eligible expenses have been incurred at that date. Nonprofit organizations will need to evaluate their individual facts and circumstances in determining the extent to which conditions have been substantially met at a given reporting dates.