United States

Proposed deferral for certain entities: ASC 606 and ASC 842

FINANCIAL REPORTING INSIGHTS  | 

Due to the coronavirus pandemic, the Financial Accounting Standards Board (FASB) recently issued a proposed Accounting Standards Update (ASU) that would grant a one-year effective date delay for certain entities as follows:

  • Topic 606, Revenue from Contracts with Customers, of the FASB’s Accounting Standards Codification (ASC) for franchisors that are not public business entities (as defined in the Master Glossary of the ASC). For these entities only, the FASB proposed the effective date of ASC 606 be deferred (on an optional basis) to annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020 for financial statements for fiscal years that have not yet been issued. 
  • ASC 842, Leases, for 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 (i.e., public not-for-profit entities) that have not yet issued financial statements. For these entities only, the FASB proposed the effective date of ASC 842 be deferred to fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
  • ASC 842 for private companies and private not-for-profit entities (i.e., not-for-profit entities other than those considered public as defined in the previous bullet point). For these entities only, the FASB proposed the effective date of ASC 842 be deferred to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

ASC 842 may still be adopted early by the entities affected by the related deferrals.

The deferrals are effective only upon issuance of a final standard. The proposed ASU, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, is available for comment until May 6, 2020.

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