On Wednesday, May 20, 2020, the Financial Accounting Standards Board (FASB) voted to give private companies and not-for-profit organizations an extra year to comply with the revenue recognition and leases standards. This will allow companies impacted by the coronavirus pandemic more time to implement the new standards.
Last month, FASB had issued a proposal to defer the effective date of Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) for certain entities. This proposal addressed only private franchisor businesses for Topic 606 and all non-public entities for Topic 842. However, the FASB decided to extend the deferral of Topic 606 to all non-public entities that have not yet issued their financial statements. For these entities, the effective date of Topic 606 will be for annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. Early application will continue to be permitted.
The lease standard will be effective for all non-public entities for fiscal years starting after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application will continue to be permitted.
The above are “tentative board decisions” by the FASB. However, the FASB expects to issue final standards during the first week of June.
Please submit your inquiry or questions using the form below and we’ll get back to you shortly.