Nonprofit Accounting Basics

Accounting for Government Grants: Sample Journal Entries

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Following are some examples of journal entries for accounting for government grants.

Proper Accounting for Contributions:

Unrestricted award

Journal Entry - Unrestricted Award

Temporarily Restricted award

Journal Entry - Temporarily Restricted Award


Permanently Restricted award

Journal Entry - Permanently Restricted Award


NOTE: The investment income will be recorded into the unrestricted, temporarily restricted or permanently restricted fund based on the donor's guidance. In the absence of specific instructions all investment earnings are to be considered unrestricted.

Cost reimbursable grants

When grant awarded
No entry made since award is conditional upon incurring qualifying expenses

Journal Entry - Cost Reimbursable Grants

 

In-kind contributions

Journal Entry - In-Kind Contributions

 
NOTE: The expense account charged should be based on the service provided (i.e. pro-bono legal services should be charged to legal expense)

 

Agency transactions

Journal Entry - Agency Transactions


Split interest agreements (assuming charitable gift annuity)

Journal Entry - When Assets Are Transferred


NOTE: The annuity payment liability represents the net present value of the expected future distributions to 3rd parties. The revenue is recorded as the difference between the assets transferred and the liability recorded.

Journal Entry - When Annuity Payments Are Made

NOTE: The "Change in value of split-interest agreements" is an income account that belongs on the statement of activities.

Conditional contributions

No entry made until conditions are met