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How do I log non-taxable grant funds on my balance sheet?
AI accountant’s answer:
I'm not an accountant, but I can give you a general idea of how to record non-taxable grant funds on your balance sheet. Typically, you would record the grant as a liability until you've met any grant requirements, and then you can move it to revenue. Here's a step-by-step process: 1. When you receive the non-taxable grant, record it as a liability (e.g., "Deferred Grant Income") under the liabilities section of your balance sheet. This is because you may still have obligations to fulfill before fully recognizing the grant as revenue. 2. As you satisfy any grant requirements and use the grant funds, you can move the appropriate portion of the liability amount to a revenue account (e.g., "Grant Revenue") under the "Other Income" or "Non-Operating Income" section of your income statement. 3. As the grant funds are used and recognized as revenue, the liability account balance should decrease accordingly. Keep in mind that your specific situation and accounting system may require adjustments or additional steps, so it's a good idea to consult with a qualified accountant for tailored guidance.
Comment from reviewer
Ieva Ivanauskas, EA
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