FASB Affirms Deferral Of Leasing Standard And Expands Deferral Of Revenue Recognition Standard For Certain Private Companies - Brown Edwards

At the May 20, 2020 meeting, the FASB voted to approve earlier proposed deferrals:

• ASC 842, Leases, for all private companies and private not-for-profit entities
• ASC 606, Revenue from Contracts with Customers, for franchisors that are not public business entities and expanded this deferral for all entities that have not yet adopted the guidance.

Revenue from Contracts with Customers (Topic 606)

The FASB affirmed its decision to amend the effective date of Revenue from Contracts with Customers (Topic 606) for franchisors that are not public business entities and also decided to amend the effective date of Topic 606 for all entities that have not yet adopted the guidance (that is, entities that have not yet issued financial statements or made their financial statements available for issuance reflecting the adoption of Topic 606). For those 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.

Leases (Topic 842)

For private companies and private not-for-profit (NFP) entities, the Board affirmed its decision to amend the effective date of Topic 842. For those entities, the effective date of Topic 842 will be for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application will continue to be permitted.

For NFP entities that have issued or are conduit bond obligors for securities that are traded, listed, or quoted on an exchange or an over-the-counter market (public NFP entities) and which have not yet issued financial statements (or made their financial statements available for issuance) reflecting the adoption of Topic 842, the Board affirmed its decision to amend the effective date of Topic 842. For those entities, the effective date will be fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption will continue to be permitted.

The Board clarified that a public NFP entity that has issued financial information, rather than financial statements, that reflects adoption of Topic 842 is eligible to apply the deferral.

Early adoption would continue to be allowed for each of these standards. A final ASU is expected shortly.

The Board decided to retain the effective date of Accounting Standards Update No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made.