The FASB on June 3, 2020, published a new accounting standard that grants a one-year delay on leases and revenue recognition accounting rules for a subset of companies, many of which lack resources and are pressed by work constraints brought on by the coronavirus crisis.
The board issued Accounting Standards Update (ASU) No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, to defer two standards: ASU. 2014-09, Revenue from Contracts with Customers (Topic 606), for privately owned companies and nonprofits that have not yet adopted the standard, and ASU No. 2016-12, Leases (Topic 842) for all private companies, private not-for-profit organizations, and public nonprofits that have not yet adopted the rules. The standards are two of the most substantial accounting changes to hit the U.S. marketplace in decades.
Under the deferral, private companies and not-for-profit organizations that qualify can choose to apply Topic 606, Revenue from Contracts with Customers, to annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020.
For leases rules, private companies and private not-for-profit organizations can apply the standard to fiscal years beginning after December 15, 2021, and to interim periods within fiscal years beginning after December 15, 2022. Public not-for-profit organizations that have not yet issued (or made available to issue) financial statements reflecting the adoption of the leases guidance can apply the standard to fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
The date delays are optional. Earlier adoption is allowed.
For more information please contact Greg Elpers, CPA at firstname.lastname@example.org