FASB Proposes Delay to Effective Date of Leases Standard

By Andrew Prather, CPA

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 FASB has taken the next step in formally delaying the effective date of the Leases standard.  They are also delaying the effective date for two other new ASUs that impact credit loss accounting and the accounting for derivatives/hedges.

A recent FASB News Alert was issued, noting that the FASB has issued an ASU exposure draft to change the effective dates of these ASUs.  After the exposure period ends in mid-September the FASB plans to quickly issue a final standard, which would make the change to the effective dates official.

The proposed change to the effective date of the Leases standard is of particular interest as this new standard broadly effects almost all entities that use U.S. GAAP for their financial statements.  The proposed change to the effective date of the Leases standard is only for nonpublic entities (private companies and nonpublic not-for-profit organizations).  So, this proposed change would not be applicable to public companies and public not-for-profit organizations, and the effective dates for those public entities would not change.

The change to the effective date for nonpublic entities is to move it from the original date of calendar 2020 (fiscal years ending in 2021) to one year later – calendar 2021 (fiscal years ending in 2022).

Please contact your Clark Nuber service team for more information.

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