FASB Votes to Defer Effective Date of New Lease Accounting Standard

Rödl & Partner Accounting Matters Vol 2019 – 1, published in Octobe 2019

Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), was issued in February 2016. For nonpublic entities, it was scheduled to be effective for fiscal years beginning after December 15, 2019. Early adoption was allowed.

The Financial Accounting Standards Board voted Wednesday, October 15, 2019 to approve a proposal to delay the effective date of the new lease accounting standard for private companies, nonprofits and small public companies. The intent of FASB is to give these companies more time to implement the new lease accounting rules. The FASB decision is also in response to complaints from various companies about the difficulties of implementing multiple new standards, particularly the new revenue recognition standard.

FASB has directed its staff to draft an Accounting Standards Update (ASU) that will change the effective date of the new lease accounting standard and be issued following a formal written ballot by the board, which is expected to take place in November.

Under the ASU, the effective date for the new lease accounting standard for private companies, nonprofits, and small public companies would be delayed one year to fiscal years beginning after December 15, 2020.

Early-adoption option for the new lease accounting standard will remain unchanged.

If you have any questions, please contact your Rödl & Partner office.

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