USA Incentive funds received from a state

[Ecocontroller]

We are a new business and so have applied for funding from the state in which we have just opened an R&D facility - we just received funding which can be used to purchase equipment, job training, etc. There is no obligation to pay these funds back. I chose to book this as a credit to facility costs in the P&L since we were eligible to receive the 1st payment upon entry into our facility lease. I now have someone questioning how i booked this. I could not find any accounting guidance. Any comments would be appreciated

 

[mike99]

More information would be needed, e.g., what is this lease upon which the funding is based, when is year end, what are the costs currently incurred, when does R&D begin, etc.

My gut feel from the limited information above is that you were incorrect to recognise the full amount as it stands in P&L. Rather, you ought to have deferred it over the period within which costs would be incurred, in order to match the revenue with the underlying costs.