In recognition of the extraordinary business climate resulting from the COVID-19 pandemic, the Financial Accounting Standards Board (FASB) is providing relief from implementation of two major accounting standards for private companies and not-for-profit (NFP) entities.
Revenue Recognition (ASC 606)
The FASB deferred the effective date of the new rules for revenue recognition (ASC Topic 606, Revenue from Contracts with Customers) for private companies and NFP entities that have not yet issued financial statements or made those financial statements available for issuance.
For those entities, the new effective date for ASC Topic 606 will be for years beginning after December 15, 2019 (that is, financial statements for the year ending December 31, 2020). Early application will continue to be permitted.
Leases (ASC 842)
The FASB deferred the effective date of the new rules for leases (ASC Topic 842, Leases) for private companies and all NFP entities that have not yet issued financial statements or made those financial statements available for issuance.
For those entities, the new effective date for ASC Topic 842 will be as follows:
- For private companies and private NFP entities, the effective date will be for years beginning after December 15, 2021 (that is, financial statements for the year ending December 31, 2022).
- For NFP entities that are conduit bond obligors, the effective date will be for years beginning after December 15, 2019 (that is, financial statements for the year ending December 31, 2020).
Deferral Not Official Until Final Standard Issued
All entities cannot defer adoption of ASC Topics 606 and 842 until the FASB issues a final Accounting Standard Updates (ASU) codifying the deferral into U.S. generally accepted accounting principles. Here is a link to view the ASUs issued by the FASB.
