Main Menu

AICPA Issues Guidance on Accounting for Forgivable PPP Loans


According to new guidance for borrowers issued June 10 by the American Institute of Certified Public Accountants (AICPA), a nongovernmental entity may account for a Paycheck Protection Program (PPP) loan as a financial liability in accordance with FASB ASC Topic 470, Debt, or under other models, if certain conditions are met.

The AICPA developed Technical Question and Answer (TQA) 3200.18, Borrower Accounting for a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program. The TQA addresses accounting for nongovernmental entities only, including business entities and not-for-profit entities. According to the TQA, an entity accounting for the PPP loan under Topic 470:

  • Would initially record the cash inflow from the PPP loan as a financial liability and would accrue interest in accordance with the interest method under ASC Subtopic 835-30.
  • Would not impute additional interest at a market rate.
  • Would continue to record the proceeds from the loan as a liability until either (1) the loan is partly or wholly forgiven and the debtor has been legally released or (2) the debtor pays off the loan.
  • Would reduce the liability by the amount forgiven and record a gain on extinguishment once the loan is partly or wholly forgiven and legal release is received.

For the entire TQA, click here

If you have questions, please contact Lincoln Gray, Audit Partner and Financial Services Industry Group Leader, at 314.983.1235 or


Back to Page