At its meeting on May 20, 2020, the Financial Accounting Standards Board (FASB) evaluated the feedback received on the proposal to defer the effective date for the new revenue recognition and lease standards for certain entities.
The FASB made the following tentative decisions at the meeting. While the board members indicated they intend to vote in favor of these matters, the deferrals will not be effective until a final Accounting Standards Update has been issued.
Revenue recognition
The FASB voted to defer the effective date of ASC Topic 606 for all entities that haven’t yet issued financial statements that include the adoption of ASC Topic 606. This was a broader deferral than originally included in the exposure draft. The proposal for the deferral was specific to franchisors; however, based on feedback received, the FASB decided to expand the deferral to all entities that haven’t issued financial statements reflecting the adoption of ASC Topic 606. The new effective date would be for annual reporting periods beginning after Dec. 15, 2019.
The FASB also considered a proposal to defer the effective date of the new not-for-profit contributions guidance in Accounting Standards Update 2018-08 to align with the proposed deferral of ASC Topic 606 but declined to do so.
Leases
The FASB voted to offer an additional, optional one-year deferral of ASC Topic 842 for private companies and private not-for-profit entities to implement the new leases standard. If elected, the new effective date would be for annual reporting periods beginning after Dec. 15, 2021.
The FASB also approved a deferral of the effective date of the leases standard for not-for-profit (NFP) entities that are conduit bond obligors that haven’t yet issued financial statements reflecting the adoption of ASC Topic 842. The effective date for these NFP entities would be periods beginning after Dec. 15, 2019. In response to questions raised by the exposure draft, the FASB clarified that entities that have issued financial information, but not a full set of financial statements, that includes the adoption of ASC Topic 842 would be eligible for the deferral.
The FASB also discussed technical questions that had arisen related to Paycheck Protection Program loans and disclosure of government assistance. More information on the FASB Board Meeting and resulting decisions can be found in the Tentative Board Decisions on the FASB’s website.
