Jun 16, 2020, 12:53 PM
(From Journal of Accountancy) The American Institute of CPAs has released some guidance on how to account for forgivable loans under the Small Business Administration’s Paycheck Protection Program. The guidance explains that while the legal form of the PPP loan is debt, some believe that the loan is, in substance, a government grant. If a nongovernmental entity that isn’t a nonprofit expects to meet the PPP’s eligibility criteria and concludes that the PPP loan represents, in substance, a grant that is expected to be forgiven, it may analogize to the International Accounting Standards Board’s IAS 20 standard to account for the PPP loan as a form of government assistance.
If there is reasonable assurance that the conditions will be met, the earnings impact of the government grants would be recorded on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. Otherwise, there is an argument to be made to say the grant is conditional until formally forgiven. NBOA’s Jennifer Hillen, vice president for professional development and business affairs, recommends that schools work with their auditors, attorney and bank on this now to avoid any surprises later.
More from Journal of Accountancy and The AICPA Technical Question and Answer
(From The 74 Million) As schools prepare to reopen in the fall, architects are being asked to model a variety of socially distanced scenarios. For example, since schools with open floor plans are better than those that have traditional designs featuring corridors and classrooms, they may begin transitioning libraries and gymnasiums into classroom spaces, using dividers for visual separation between groups of students to make the large spaces appear smaller. Handwashing stations, transparent physical barriers and one-way hallways are also expected to proliferate in schools as new health and safety protocols take place.
(From The New York Times) Five of America’s leading private foundations have pledged to increase their charitable giving by a total of $1.7 billion. To raise the money, the foundations are preparing to issue a combination of 30- and 50-year bonds so they can increase their spending without eroding the corpus of their endowments. Higher education stands to benefit considerably from the new grants, which will be dedicated to the foundations’ various missions.
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