What is a requirement for revenue recognition in the case of a formula grant?

In the context of formula grants, the primary requirement for revenue recognition is that all eligibility requirements must be met. This includes specific criteria outlined in the grant agreement, such as the recipient's compliance with regulations, program eligibility, and any other conditions set forth by the granting agency. Recognizing revenue when these eligibility requirements have been satisfied ensures that the funds are being allocated appropriately and are consistent with the terms of the grant.

While qualifying expenditures and matching requirements are important elements in the management and reporting of grants, they come into play at different stages in the process. Qualifying expenditures relate to the actual spending of grant funds on eligible activities, and matching requirements involve ensuring that the recipient contributes a certain level of funding alongside the grant. However, these aspects do not directly constitute the initial condition for recognizing revenue associated with the grant.

Therefore, focusing on the fulfillment of all eligibility requirements as the critical factor establishes a clear framework for when revenue can be recognized in the context of a formula grant.