Lease & Revenue Delay Approved for Private Companies & NFPs
On May 20, 2020, FASB reviewed feedback on its April 21, 2020, proposal to delay the effective date for Accounting Standards Codification (ASC) 842, Leases, for private companies and all not-for-profits (NFP), including an NFP that has issued—or is a conduit bond obligor for—securities that are traded, listed or quoted on an exchange or an over-the-counter market. The proposal included an extra year to implement ASC 606, Revenue from Contracts with Customers, only for nonpublic franchisors. Based on the feedback received, FASB voted to expand the scope of the ASC 606 delay to all entities for financial statements that have not yet been issued or made available for issuance.
These changes will be effective upon the issuance of a final accounting standard update that will be released shortly. Early adoption would continue to be permitted.
For NFP entities that have issued—or are a conduit bond obligor for—securities that are traded, listed or quoted on an exchange or an over-the-counter market, the delay is only effective if the organization has not yet issued or made available for issuance its generally accepted accounting principles (GAAP) financial statements.
The final standard will clarify that interim financial information posted to the Electronic Municipal Market Access (EMMA) system—non-GAAP financial information that does not include full disclosures—would not disqualify an entity from taking advantage of this lease deferral.
The delay is only effective if the entities have not yet issued or made available for issuance their financial statements.
Some respondents also requested a delay for Accounting Standards Update (ASU) 2018-08, Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. FASB decided not to change the effective date for ASU 2018-08 because the board felt it provided useful guidance in navigating accounting for COVID-19 assistance received.
BKD will continue to follow this developing situation. If you have questions, contact your BKD Trusted Advisor™ today.