FASB Delays Effective Date for Revenue Recognition and Lease Standards
In an effort to provide relief to certain entities experiencing business disruption due to the COVID-19 pandemic, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-05.
The ASU allows private companies and private not-for-profit organizations who have not yet issued their financial statements to delay their implementation of the Revenue Recognition standard (Topic 606) by one year. If the company or not-for-profit organization elects to delay the adoption pursuant to ASU 2020-05, the new revenue recognition standard will be required to be implemented for annual reporting periods beginning after December 15, 2019.
Additionally, ASU 2020-05 delays the effective date for the new Leases standard (Topic 842) by an additional year for private companies and private not-for-profit organizations. The new effective date of the Leases standard is for annual reporting periods beginning after December 15, 2021. Early application of these standards continues to be permitted.
The full text of ASU 2020-05 can be found on the FASB website.