American manufacturing has quietly become one of the most grant-funded corners of the economy. State economic-development packages, workforce training funds, federal supply-chain programs for semiconductors, batteries, and defense: if you run a plant, there is a decent chance public money has helped pay for some of your equipment, your training, or your building, and until recently US accounting rules had almost nothing to say about how to book it.
That gap closed in December 2025, when FASB issued ASU 2025-10, the first US standard specifically covering government grants received by business entities. If your company has taken grant money or plans to, here is what changed, in operator terms.
What the standard says, minus the jargon
Before this, US companies improvised, most borrowing the international model informally. The new standard essentially blesses a disciplined version of that approach:
You book a grant only when it is probable you will meet the conditions and receive it. No more recognizing announced-but-conditional money because the press release felt certain.
Grants tied to assets reduce the asset or sit as deferred income and flow into the P&L over the asset's life. The $2M incentive that funded your new machining line does not land as year-one income; it offsets the equipment's cost over its useful life, matching the benefit to the machine's working years.
Grants tied to costs offset those costs in the periods you incur them. A grant reimbursing workforce training lands as the training happens.
Effective dates are generous: annual periods beginning after December 15, 2028 for public companies and a year later for everyone else, with early adoption allowed. Privately held manufacturers have runway, but the direction is now fixed.
Why this matters more than it sounds
Your EBITDA presentation just got consequences. How grant money flows through the P&L changes reported earnings, and for anyone preparing for a sale, a buyer's QoE team will normalize grant income mercilessly. A grant booked as a one-time earnings spike is exactly the kind of thing that gets re-cut in diligence. Adopting the disciplined treatment early means your history already tells the defensible story when someone examines it.
Lender covenants care. If a grant inflates a year's earnings, covenant ratios based on that year mislead everyone, including you.
Grant conditions are now a bookkeeping obligation with teeth. Most incentive packages carry clawback conditions: create N jobs by a date, hold investment above a threshold, keep the operation in the state. The probable-and-received test forces you to track those conditions explicitly, which frankly you should be doing anyway, because a clawback you forgot about is a liability hiding off the books.
The practical move
If grants are material to your business: inventory every grant, its conditions, and its current accounting treatment; pick the compliant treatment now rather than restating later; and if a transaction is anywhere on your horizon, adopt early so your reported history needs no asterisks. This is a few days of focused work in a business with a handful of grants, and it is squarely in the lane of a fractional CFO who knows the industry.
We are operators, not your audit firm, so the technical adoption belongs with your CPA. But making sure the money you fought to win does not become a diligence problem later is exactly the kind of unglamorous work that protects value. Start a conversation if grant money is on your balance sheet and nobody has looked at it this way yet.