Regardless of whether a not-for-profit entity expects to repay the PPP loan, or believes it represents an in-substance grant, the loan may be accounted for as a financial liability in accordance with ASC 470, Debt, with interest accrued in accordance with the interest method under ASC 835-30, Imputation of Interest.įollowing the guidance in ASC 470, a borrower would recognize the entire loan amount as a liability on the balance sheet with interest accrued and expensed over the term of the loan.
While the guidance is nonauthoratitive, it reflects the conclusions of the AICPA staff who consulted with the SEC and Financial Accounting Standards Board (FASB) staff, as well as various expert panels, to develop it.Īs indicated in the TQA, not-for-profit entities can account for a PPP loan as debt under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 470, Debt, or as a conditional contribution under ASC 958-605, Revenue Recognition, provided certain conditions are met. TQA 3200.18 provides nonauthoritative guidance on how nongovernmental entities, including business entities and not-for-profit entities, should account for a forgivable loan received under the PPP. Given the unique nature of the PPP, questions have arisen about how a borrower should account for the loan in accordance with US Generally Accepted Accounting Principles (GAAP). To assist entities in accounting for forgivable loans received under the PPP, the American Institute of Certified Public Accountants (AICPA) issued Technical Question and Answer (TQA) 3200.18, Borrower Accounting for a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program, on June 10, 2020. Here, we outline the guidance that’s been provided so far for not-for-profit entities-to help organizations understand the PPP loan accounting options available and figure out which one applies to their specific situation.
#PERSONAL LOAN FORGIVEN JOURNALY ENTRY HOW TO#
Now, organizations are tasked with determining how to account for these loans. Many not-for-profit entities and institutions of higher education have received loans under the Paycheck Protection Program (PPP). Provider Reimbursement Enterprise Services.Operational Improvement & Performance Excellence.Bank Secrecy Act and Antimoney Laundering.Fair Value & Financial Statement Reporting.Quality of Earnings (Buy-Side/Sell-Side).Tax Incentives Energy Efficient Buildings.Employer credit for family and medical leave.State & Local Tax Controversy & Dispute Resolution.Federal Tax Controversy & Dispute Resolution.
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