FASB to Propose Delay to Effective Dates of Leases and Revenue Recognition for Franchisors

May 21 Update: The FASB has voted to officially delay the effective dates for the Leases (Topic 842) and Revenue from Contracts with Customers (Topic 606) standards. The Leases (Topic 842) standard is now effective for private companies and private not-for-profit (NFP) entities for fiscal years beginning after December 15, 2021. The standard is effective for public NFPs that have not yet issued financial statements (or made them available for issuance) for fiscal years beginning after December 15, 2019.

The Revenue from Contracts with Customers (Topic 606) standard has been delayed for franchisors that are not public business entities and all entities that have not yet issued financial statements (or made them available for issuance) for fiscal years beginning after December 15,

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Contributions Received and Contributions Made – Applying a New Lens

When the new revenue recognition standard came out, Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), it specifically excluded contribution revenue and investment returns. It appeared there would be little effect on many not-for-profit organizations. However, ASU 2014-09 resulted in renewed focus on certain revenue streams of NFPs, particularly U.S. Federal funding. In response, the Financial Accounting Standards Board (FASB) issued updated guidance in June 2018, Accounting Standards Update No. 2018-08, Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made. ASU 2018-08 reiterated existing U.S.

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Franchisors Seeing a Big Change in Revenue Recognition

April 21, 2020 update: To provide accounting relief and clarity during the COVID-19 crisis, the FASB published an exposure draft with proposals to delay the effective dates for Revenue Recognition (Topic 606). Find more information here.

Franchisors, it’s not too late to start assessing and evaluating the impact of a new accounting guidance. ASU 2014-09, “Revenue from Contracts with Customers” (ASC 606), provides new guidance for recognizing revenue for contracts with customers.

The guidance under ASC 606 is effective for public entities with annual reporting periods beginning after December 15, 2017. For non-public entities, it is effective one year later,

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ASC 606: A Case Study for Operating Real Estate Companies

April 21, 2020 update: To provide accounting relief and clarity during the COVID-19 crisis, the FASB published an exposure draft with proposals to delay the effective dates for Leases (Topic 842). Find more information here.

The implementation date of ASC 606: Revenue from Contracts with Customers is quickly approaching,  which may have some real estate operators feeling a bit apprehensive. For private companies, ASC 606 is effective for years beginning after December 15, 2018. So, if your company has a calendar year-end, ASC 606 will be effective for fiscal years beginning January 1,

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How Do the New GAAP Revenue Recognition Standards Impact Tax?

This year brought many accounting and tax changes for both private and public companies. In addition to the changes brought by the Tax Cuts and Jobs Act (TJCA), the new GAAP revenue recognition standards will take effect for non-publicly traded companies for years beginning after December 15, 2018 (unless the company elects to apply these standards earlier).

These revenue recognition standards require companies to evaluate their revenue contracts and obligations to determine the amount of revenue they expect to be entitled to under a customer contract. They will then need to determine if they are required to recognize that revenue for book purposes,

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