The FASB recently voted in favor to defer the effective date for leases (ASC 842) and revenue from contacts with customers (ASC 606) for one year for certain entities.
The FASB voted to defer the effective date for ASC 842 for
private companies and certain not-for-profit entities (“NFPs”) for one
year. For private companies and private NFPs, the leasing standard will
be effective for fiscal years beginning after December 15, 2021, and interim
periods within fiscal years beginning after December 15, 2022. For public NFPs
the leasing standard will be effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years.
The FASB also voted to defer the effective date for ASC 606, Contracts with Customers, for franchisors that are not public business entities for one year. As a result, for such franchisors only, the revenue standard will be effective for periods beginning after December 15, 2019 and interim reporting periods within annual reporting periods beginning after December 15, 2020. The Board also indicated it plans to conduct additional outreach with respect to reducing implementation costs for this industry, including the impact of how franchisors recognize initial franchise fees.
Early adoption would continue to be allowed for each of these standards. The FASB anticipates that it will provide a 15-day public comment period on these proposed deferrals once the proposed accounting standards updates are published.
To discuss these changes and how they affect your business, please contact the Crosslin audit team at 615-320-5500. We are here to help. As always, we appreciate your business!