FASB To Delay New Leasing Rules
The Financial Accounting Standards Board (FASB) voted unanimously on July 17, 2019, to propose delaying the effective date for portions of its major accounting standards, including ASC 842, Leases, for privately held companies and nonprofit organizations.
The delay means TRALA privately held companies now have an extra year to adopt the new lease accounting rules, subject to the FASB issuing a formal proposal for public comment before finalizing the new effective dates. For private companies, ASC 842 was previously scheduled to take effect for annual financial reporting periods beginning after December 15, 2019 (2020 for calendar year-end companies), and interim periods after December 15, 2020. The new leasing standard took effect for public companies in January 2019. With the proposed delay, private companies will be required to adopt for annual financial reporting periods beginning after December 15, 2020 (2021 for calendar year-end companies).
FASB explained their decision by citing well-documented struggles that public companies have experienced with adopting and complying with the new lease standards and the ongoing costs to smaller companies trying to change their internal processes to meet the upcoming original deadline.
BDK has compiled a very helpful and thorough description of the FASB decision, its impact on privately held companies, and their analysis of what this means going forward for leasing. You can view their description by clicking here.
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