Filed under: Audit & Assurance
To provide accounting relief during the COVID-19 crisis, the FASB, in its board meeting held on May 20, 2020, approved the proposal to delay the effective date for Revenue Recognition, Topic 606.
The postponed effective date applies for franchisors that are not public business entities. This deferral will provide the Board with time to develop a practical expedient to address franchisors’ primary implementation issue regarding initial franchisee fee revenue recognition.
The FASB also expanded the scope of deferral to include all entities that have not yet adopted the guidance. This includes entities that have not yet issued financial statements or made their financial statements available for issuance reflecting the adoption of Topic 606. This deferral is expected to provide immediate relief for organizations who do not have the resources available to implement the new guidance due to the COVID-19 crisis.
The optional deferred effective dates are for annual reporting periods beginning after December 15, 2019 and for interim reporting periods within annual periods beginning after December 15, 2020.
The Board retained the effective date of Accounting Standards Update No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The Board believes the adoption of ASU 2018-08 will be helpful to not-for-profit entities as they account for the pandemic-related assistance they received.
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