NetAsset - Grant Accounting
Grant Tracking in NetAsset
NetAsset does not currently support grant tracking. This article explains what that means and what to expect.
What is grant tracking?
When a government grant funds an asset purchase, the accounting treatment directly affects the asset's cost basis, net book value, and depreciation — which is why this need commonly arises in fixed asset management.
The required treatment depends on the applicable standard:
- IAS 20 (IFRS reporters): Entities must choose one of two methods as an accounting policy election:
- Cost reduction: The grant reduces the asset's gross cost, lowering the depreciable basis
- Deferred income: The grant is recorded as a liability and amortized to income over the asset's useful life
- US for-profit entities (no authoritative GAAP standard): There is no single US GAAP standard governing government grants for for-profit entities. Most practitioners apply IAS 20, using either the cost reduction or deferred income method (sometimes called the deferred credit method)
- US nonprofits (ASC 958): Grant revenue is recognized when donor-imposed conditions are met, which affects how the funded asset is recorded
- Government entities (GASB 33): Grant revenues are recognized when eligibility requirements are met, which may affect how the funded asset is recorded and depreciated
Current NetAsset Behavior
NetAsset does not have dedicated fields or automation for recording grant amounts, tracking grant conditions, or applying grant-related adjustments to asset cost or depreciation.
Workarounds
Cost Reduction Method:
If the grant is received at acquisition, the asset would just be entered at the net cost from day one.
If the grant is received in the middle of the asset's life, use the Build Up functionality to add a negative cost to the existing asset. Vendor Credits and Journals with a Credit hitting the CIP/Clearing account will decrease the gross asset value. Verify the transaction is tagged to the grant segment for tracking purposes for a clean audit trail.
Deferred Income Method:
This method requires a separate liability created and amortized over the asset's life to specific GL accounts.
This can be handled in the amortization module in NetSuite or as a negative asset record in NetAsset. If using a NetAsset Asset record, you can mark the record as "No GL Impact" if created only for tracking purposes.
Requirements:
- Create new asset types for the deferred income transactions. You will need to create one asset type per unique GL account groupings.
- With the grant bearing a negative amount, the mappings should be reversed to achieve the correct GL postings during depreciation runs, as illustrated below. Hence, we cannot use the same Asset Type for both the main asset and the grant.
Asset Creation:
- Add custom fields or a custom sub-record to track the related assets and grant/fund accounting.
- Enter the Capitalized Asset Value as a negative amount. This will result in the depreciation schedule showing negative amounts as well.
Transactions:
- Unless the "No GL Impact" box is checked, the asset record will post transactions as normal with the other assets.
- If a clearing account has not been configured for the grant, the system will post both the debit and credit entries to the same account. We recommend setting up a dedicated clearing account for grants, as this provides better visibility and makes it easier to track amounts that are pending capitalization. It also helps distinguish capitalization-related activity from the underlying grant liability and income accounts, resulting in clearer accounting and reconciliation. See an example where there is no clearing account setup:
- During depreciation, we would expect the grant to be amortized, with the corresponding liability balance being reduced and reclassified as income over time. This ensures that the grant income is recognized systematically throughout the useful life of the related asset, aligning the income recognition with the depreciation expense of the asset.
Reporting:
- While there is no native report specifically designed for tracking grants, you can customize any of NetSuite's reporting tools (saved search, analytics) or leverage NetAsset Query-Based Reports to meet your reporting requirements.
- A common approach to creating custom reporting is using NetSuite Analytics (SuiteAnalytics Workbooks). This tool allows you to combine multiple datasets, create joins across records, build pivot tables, and design more flexible and interactive reports.
Submitting a Feature Request
If grant tracking is important to your organization, you can submit a feature request. Contact your Netgain representative and include the following:
- The accounting standard you follow (US GAAP, IFRS, or GASB)
- Whether you need cost reduction treatment, deferred income treatment, or both
- An estimate of how many assets in your portfolio are grant-funded
- Any specific grant conditions or compliance reporting requirements
This detail helps our product team understand your use case and prioritize future development appropriately.
