The Financial Accounting Standards Board (FASB) voted this week to issue an exposure draft for a 30-day comment period that will propose new effective dates for accounting for leases, credit losses, hedging and long-duration contracts for certain companies.
A summary of the proposed changes are as follows:
· Lease accounting – The new effective date for companies with a calendar year-end that are not public business entities would be January 1, 2021, a one-year extension. The effective date for calendar year-end public business entities, employee benefit plans, and not-for-profit conduit bond obligors would remain January 1, 2019.
· Credit losses – The effective date for calendar year-end SEC companies, excluding smaller reporting companies, would remain January 1, 2020. The new effective date for all other calendar year-end companies would be January 1, 2023.
· Derivatives and hedging – The effective date for calendar year-end public business entities would remain January 1, 2019. The new effective date for calendar year-end companies that are not public business entities would be January 1, 2021, a one year extension.
· Long-duration insurance contracts – The new effective date would be January 1, 2022, for calendar year-end public business entities and January 1, 2024, for all other entities with a calendar year-end.
The FASB has acknowledged the burden placed on companies as several are major standards that are difficult to implement. The new revenue standard that is effective in 2019 for private companies is complex and consuming the time of financial reporting staff at companies that often have limited resources. Additional factors that FASB considered include the time required to educate staff, difficult transition guidance, challenges in the development of IT solutions and effective internal controls, and the opportunity to learn from implementation challenges experienced by SEC filers.
Please Join Us! 13th Annual Dan McCarty Memorial
Thursday, February 13, 2020
Petruzzello's, 6950 Rochester Road Troy, MI 48085