Accounting for Government Grants: Sample Journal Entries

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

Proper Accounting for Contributions:

Unrestricted award

Temporarily Restricted award

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

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

Split interest agreements (assuming charitable gift annuity)

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.

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