United States

ASUs defer various effective dates (including CECL & leases)

FINANCIAL REPORTING INSIGHTS  | 

On November 15, 2019, the Financial Accounting Standards Board (FASB) issued the following two Accounting Standards Updates (ASUs) to defer the effective dates for certain guidance in its Accounting Standards Codification (ASC) for certain entities:

The following summarizes the effective dates that have and have not been revised by the FASB:

Guidance affected

Type of entity

Effective dates

ASC 842, Leases

Public business entities (PBEs), not-for-profit entities that have issued, or are conduit bond obligors for securities that are traded, listed or quoted on an exchange or an over-the-counter market and employee benefit plans that file or furnish financial statements with or to the Securities and Exchange Commission (SEC)

Not revised: Fiscal years beginning after December 15, 2018, including interim periods within those fiscal years1

All other entities

Revised: Fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021

Amendments to ASC 815, Derivatives and Hedging

PBEs

Not revised: Fiscal years beginning after December 15, 2018, including interim periods within those fiscal years

All other entities

Revised: Fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021

ASC 326, Financial Instruments—Credit Losses

PBEs that are SEC filers, except for entitles eligible to be smaller reporting companies (SRCs) (as defined by the SEC)

Not revised: Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years

All other entities

Revised: Fiscal years beginning after December 15, 2022, and interim periods within those fiscal years

Amendments to ASC 350, Intangibles—Goodwill and Other 2

PBEs that are SEC filers, except for entities eligible to be SRCs (as defined by the SEC)

Not revised: Annual and any interim impairment tests performed for periods beginning after December 15, 2019.

All other entities

Revised: Annual and any interim impairment tests performed for periods beginning after December 15, 2022.

Amendments to ASC 944, Financial Services—Insurance

PBEs that are SEC filers, except for entities eligible to be SRCs (as defined by the SEC)

Revised: Fiscal years beginning after December 15, 2021, and interim periods within those fiscal years

All other entities

Revised: Fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024

For purposes of the effective date deferrals for ASC 326, ASC 350 and ASC 944, an entity's status as an SRC should be based on its most recent past SRC determination as of November 15, 2019. For a calendar-year-end entity, the most recent past SRC determination as of November 15, 2019 was the determination it made on June 28, 2019 (the last business day of its most recent second quarter). Further, assume that the entity’s most recent past SRC determination was that it is eligible to be an SRC. Based on that determination, the entity is an SRC for purposes of the effective-date deferrals for ASC 326, ASC 350 and ASC 944. This conclusion does not change even if the entity concludes on its next future SRC determination that it is no longer eligible to be an SRC. The conclusion reached as of November 15, 2019, with respect to the entity’s SRC eligibility for purposes of the effective-date deferrals holds. The same would be true in the opposite circumstance in which the most recent past SRC determination on November 15, 2019, was that the entity is not eligible to be an SRC, but its next future SRC determination was that it is eligible to be an SRC. In this situation, the entity would not be an SRC for purposes of applying the ASC 326, ASC 350 and ASC 944 effective-date deferrals.

1 Based on ASC 842-10-S65-1 (which includes an SEC staff announcement), the SEC staff will not object to certain entities that are PBEs solely because their financial statements or financial information is included in another entity’s filing with the SEC pursuant to SEC rules and regulations choosing to adopt ASC 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. An example of an entity that has this choice is an acquired private company when its financial statements are included in its public acquirer’s filing with the SEC pursuant to Regulation S-X, Rule 3-05, “Financial Statements of Businesses Acquired or to Be Acquired.” During the FASB meeting at which the Board voted to finalize the ASC 842 effective date deferral for certain entities, it was noted that the SEC staff is expected to revise their previous announcement to make it consistent with the revised ASC 842 effective date for all other entities (i.e., fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021).
When Accounting Standards Update (ASU) 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, was issued, the FASB intentionally made its effective dates the same as those for ASC 326. In light of the changes made to the effective dates for ASC 326, the FASB made the same changes to the effective dates for ASU 2017-04.


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