At its meeting on April 8, 2020, the Financial Accounting Standards Board (FASB) addressed several key issues and concerns related to the financial reporting impacts of COVID-19. The FASB reached decisions on the deferral of certain aspects of two of its most significant standards, Leases, and Revenue Recognition, and also discussed a number of COVID-19-related issues submitted through its technical inquiry services.
The new standard implementation deferrals include the following:
- Leases: The FASB intends to offer an additional one-year deferral until 2022 for private companies and certain not-for-profit entities to implement the new leases standard. In addition, to provide immediate relief to not-for-profit entities that are conduit bond obligors, those entities that were originally expected to apply the new leases guidance in their next annual financial statements will also have an additional year to apply the new guidance.
- Revenue Recognition: The FASB will offer a one-year implementation deferral for franchisors that aren’t public business entities. As a result, these franchisors will not be required to apply the new revenue recognition guidance until fiscal years beginning after Dec. 15, 2019. The FASB has also committed to add a research project to its agenda to evaluate whether there are opportunities to provide revenue recognition implementation expedients for franchisors.
The FASB also discussed various technical issues that have arisen since the COVID-19 outbreak. These include the accounting for lease incentives, loan modifications, derivatives and hedging, and fair value measurements. Given the significant number of lease concessions that are expected to be granted as a result of the economic effects of COVID-19, the FASB intends to publish a question-and-answer document to address the related accounting issues.
