FASB Relief Permits One-Year Delay on Revenue Recognition and Leases Standards
6.4.20 | COVID-19 Client Alert
Recognizing the disruptions caused by the COVID-19 crisis, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-051 that grants an effective one-year delay of the effective dates for certain companies and organizations who have not yet adopted the revenue recognition and leases standards — ASU 2014-09, Revenue from Contracts and Customers (Topic 606) and ASU 2016-12, Leases (Topic 842).
Revenue from Contracts and Customers (Topic 606)
Under the relief, private companies and not-for-profit organizations that have not yet issued their financial statements (or made financial statements available for issuance) may now defer the adoption of the revenue recognition standard to annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. This is intended to provide some breathing space for COVID-19-impacted companies.
Leases (Topic 842)
The ASU relief for the leases standard, which is intended to provide near-term relief for certain entities for whom the leases adoption is imminent, allows private companies and private not-for-profits to apply the new leases standard for fiscal years beginning after December 15, 2021, and to interim periods within fiscal years beginning after December 15, 2022.
In the case of public not-for-profits that have not yet issued, or made available to issue, financial statements that adopt the leases guidance, they are permitted to apply the standard for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
The delays granted by FASB are optional and organizations can always proceed with early adoption.
For more information on any other matter related to the COVID-19 pandemic, please contact your Berdon Advisor.
Berdon LLP New York Accountants