Cal. Code Regs. tit. 2 § 1071.5
Grants, subventions, and Provisions from the Local, State, or Federal Government for operating assistance, the acquisition of equipment, or other capital outlay should not be formally recognized in the accounts until the grant becomes a valid receivable as a result of complying with appropriate grant requirements. Usual steps attending such grants are:
Upon completion of Step (3), the amount requisitioned should be charged to a Receivable and credited to the applicable account in the revenue section.
Memo records should be started for each grant not later than the date of the grant application. These records should be maintained on a current basis and reviewed before the books are closed at the end of the fiscal year to ascertain that all requisitions have been mailed and the receivable and revenue recorded.
When all transactions for the year ended have been recorded, the Capital Outlay revenues are closed into the corresponding grant equity accounts in the Capital group. Equipment acquired from this source is recorded in account Tangible Transit Operating Property Acquired by Grant or with Grant Funds, and is accounted for and depreciated in the same manner as other equipment.
Cal. Code Regs. Tit. 2, § 1071.5