FASB Proposes COVID-19 Relief by Delaying New Lease Accounting Requirements

To provide relief from implementation challenges related to the coronavirus pandemic, the Financial Accounting Standards Board (FASB) has proposed delaying the effective date of the new lease accounting standard (ASC 842) for most private companies and not-for-profits.

Currently, the new accounting standard is scheduled to take effect in fiscal years beginning after December 15, 2020. The revised effective date, if approved through formal vote, will give non-public companies and not-for-profit entities an additional year for adoption. This means the new standard would be effective for years beginning after December 15, 2021.  

In addition to the delay for private companies and private not-for-profits mentioned above, FASB has proposed deferring the effective date of ASC 842 for public not-for-profits to fiscal years beginning after Dec. 15, 2019, including interim periods.

Furthermore, pending formal vote, the effective date for ASC 606 will also be delayed for franchisors that are not public business entities and have not yet issued financial statements reflecting the adoption of ASC 606. FASB has proposed deferring the effective date (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.

FASB accepted comments on the proposed rules for a 15-day period ending May 6, 2020.

At its April 8 meeting, the Board also discussed its response to questions regarding the following situations related to COVID-19:

• Lease concessions
• Recognition of interest income for institutions offering loan payment holidays
• Delays in timing of forecasted transactions

For updates and information about how these delays may impact your business, contact us.

Authored by Matthew Paske, CPA, CIA. 

© 2020