The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU) that would grant a one-year effective date delay for certain stakeholders applying leases and revenue recognition.
The leases effective date deferral would be limited to private companies, private not-for-profit organisations, and public not-for-profit organisations that have not yet issued their financial statements.
The aim of the proposed ASU is to provide near-term relief for certain entities for whom the leases standard is currently effective who have rapidly approaching year-end dates and for entities for whom the leases effective date is imminent.
Under the proposed ASU, private companies and private not-for-profit organisations would have the option to apply the new leases standard for fiscal years beginning after 15 December 2021, and to interim periods within fiscal years beginning after December 15, 2022. Public not-for-profit organisations that have not yet issued financial statements would have the option to apply the standard for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
The proposed effective date deferral for revenue recognition would be limited to private company franchisors. Those stakeholders would have the option to apply the new standard for annual reporting periods beginning after 15 December 2019, and interim reporting periods within annual reporting periods beginning after 15 December 2020.
FASB chair Russell Golden said: “The FASB’s proposal to delay time-sensitive standards would provide a measure of relief to certain companies and organisations focused on the COVID-19 crisis. It’s the first in a series of steps the Board is taking to ensure our stakeholders can successfully implement GAAP guidance during this time.”
Stakeholders have been encouraged to review and provide comment on the proposed ASU by 6 May 2020.