FASB members voted unanimously to propose moving back the effective date for lease accounting and two other major new accounting standards.
The Financial Accounting Standards Board voted unanimously on Wednesday to propose delaying the effective date of some of its major accounting standards, including ASC 842, Lease Accounting, for privately held companies, nonprofits, and small reporting companies.
The delay means those organizations would have an extra year — until January 2021 — to adopt the new lease accounting rules.
FASB has to issue a formal proposal for public comment before finalizing the new effective dates. For private companies, ASC 842 is currently scheduled to take effect for annual financial reporting periods starting after Dec. 15 (or after Jan. 1, 2020 for calendar periods), and interim periods after Dec. 15, 2020.
The new leasing standard took effect for public companies in January 2019, but several groups had been calling for postponing the effective date for other issuers. In May, the American Institute of CPAs formally asked FASB to push back the effective date, calling lease accounting “significant and complex.”
The AICPA cited, among other things, the overlap with the implementation of FASB’s new revenue recognition standard and the struggles public companies had complying with the new lease accounting rules.
Prior to voting to add a project to the FASB agenda to amend the effective date of the three standards, several FASB board members expressed their support. Among other benefits, a delay would provide time for greater education of private companies and for organizations to manage the disruption accounting changes cause.
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