Update published on June 5, 2020: FASB issued Accounting Standards Update (ASU) 2020-05, Revenue from Contracts with Customers (ASC 606) and Leases (ASC 842) Effective Dates for Certain Entities, as part of its efforts to support and assist stakeholders as they cope with the many challenges and hardships related to the COVID-19 pandemic.
Update Published December 12, 2019: The FASB deferred certain effective dates for its new standards on credit losses, hedging, and leases, and all of the effective dates for its new standard on long-duration insurance contracts.
Published July 26, 2019:
The Financial Accounting Standards Board (FASB) voted on Wednesday, July 17, 2019, to propose delaying the effective date of four major accounting standards, including ASC 842, Leases, for privately held companies and nonprofit organizations.
The delay would mean applicable companies have an extra year to adopt the new lease accounting standards, subject to the FASB issuing a formal proposal for public comment before finalizing the new effective dates. For private companies, ASC 842 was previously scheduled to take effect for annual financial reporting periods beginning after December 15, 2019 (2020 for calendar year-end companies), and interim periods after December 15, 2020. The new lease accounting standard took effect for calendar year-end public companies in January 2019. With adoption date deferral, private companies would be required to adopt for annual financial reporting periods beginning after December 15, 2020 (2021 for calendar year-end companies).
The proposed delay is recognition on the FASB’s part of the recent struggles public companies have experienced with adopting and complying with the new lease accounting standard. The FASB also acknowledged the burden of adopting the new revenue recognition standard, which went into effect for private companies in 2019, was placing on companies.
Blue & Co. is actively working with our assurance and non-assurance clients to assist with implementing the new revenue recognition and lease accounting standards. Despite the proposed deferred effective date for the lease standards, we will continue to advise companies to proactively address the implementation of both standards, which typically takes more time than anticipated to evaluate and adopt.
For additional insight or assistance on the adoption of the new revenue recognition and lease accounting standards, please contact your Blue & Co. representative or Patrick Brown (firstname.lastname@example.org).