SBA and EIDL grant

Any non-Tax accounting topics go here.
#1
Andrew  
Posts:
806
Joined:
21-Nov-2018 5:00pm
Location:
CA
How is this recorded on the books? Client received PPP loan in 2020. It was forgiven in 2021. EIDL received in 2020 but it's not taxable income.

PPP was a loan as is indicated by the name, so I have that on the bs as a loan in 2020.

What about the EIDL which is non-taxable income for 2020?

Journal entry with type of account (asset, liability, equity) would be much appreciated.
 

#2
Posts:
2771
Joined:
22-Apr-2014 1:34pm
Location:
North Carolina
Agree with the PPP entry. I am showing as a loan until forgiven as well.
EIDL entry in 2020 would be DR Cash, CR Non-taxable income (revenue account). Make sure the EIDL funds received are the grant, and not the loan (which would be handled differently).
 

#3
Andrew  
Posts:
806
Joined:
21-Nov-2018 5:00pm
Location:
CA
Thanks.
 

#4
Posts:
2887
Joined:
21-May-2018 7:50am
Location:
Northern MI and Coastal SC
I have done it both ways since there is no clear guidance. If I have evidence the client has satisfied all requirements for PPPL to be fully forgiven by 12/31/2020, and they do not submit the application or receive forgiveness until 2021, I let the client decide but we generally agree to follow matching principle. It is also my belief it satisfies accrual rules for recording as income/expense in year the SBA's forgiveness criteria are satisfied, since that is ultimately what determines forgiveness approval. Well, unless a client never submits a forgiveness application, at all, but to date that act has been known before financial statement issuance.

EIDL Advance and PPPL have been recorded as government grant income under "other revenue."

I'll change it if necessary when I see clarified guidance, which has not yet been issued (as far as I can find).
 

#5
Posts:
1199
Joined:
3-Sep-2021 4:01pm
Location:
OH
PPP loan gets written off to nontaxable income. I have recorded this journal entry for all my clients:

Debit: PPP Loan
Credit: PPP Forgiveness (listed as other income)

EIDL Grant:Cash
Credit: EIDL Grant (listed as other income)

These both with be adjusted out on the tax return. They will be included in book income but not in taxable income.
 


Return to General Accounting



Who is online

Users browsing this forum: No registered users and 14 guests