FASB Issues Limited Effective Date Delay for Lease Accounting Standard
Articles by: Richey May, Jun 12, 2020
On June 3, the FASB made it official and delayed the lease accounting implementation date by one year.
“The FASB issued the ASU to allow certain companies and organizations who have not yet applied the revenue recognition and leases guidance to delay their implementation by one year,” stated FASB Chairman Russell G. Golden. “We believe the deferral will provide these stakeholders a measure of relief during this unprecedented time.”
Private companies, who are already following public companies in implementing this standard, will have more time to implement a system to manage the reporting the new standard will require.
The effective date of the ASU extends the required adoption date to periods beginning after December 31, 2021, and interim reporting periods within annual reporting periods beginning after December 15, 2022.
FASB Chairman Golden also noted, “Based on feedback from our stakeholders, the FASB amended our original proposal that would have limited the revenue recognition delay to private company franchisors. Consequently, the ASU provides the revenue recognition deferral to certain other private companies and organizations that have not yet issued (or made available) financial statements that reflect adoption of the guidance.”
While a year might seem like a long time to implement the new standard, public companies had many difficulties implementing the new standard and were granted an extension.
With COVID-19 complicating many accounting operations, and possibly causing major changes to leasing plans in general, our accounting experts recommend beginning the planning phase as soon as possible.
Please contact us if you have any questions about the new lease accounting standards.
The FASB is hosting a webcast accounting and finance leaders may be interested in attending. It will cover several COVID-19 related topics and lease accounting standards. See the details here.