FASB amends codified SEC guidance on revenue and leases
KPMG reports on the FASB’s codification of recent SEC announcement on certain public business entities, and rescinds other SEC guidance on revenue and leases. The ASU amends the Codification to incorporate the SEC staff announcement providing effective date relief for certain public business entities adopting the new revenue and leases guidance and rescinds certain older SEC Observer comments on revenue and leases.
The guidance in the ASU is applicable to an SEC registrant, and its significant private company equity method investees or potentially significant private company acquisitions, that is adopting:
- The new revenue standard (ASC 606)
- The new leases standard (ASC 842)
- The SEC relief for certain public business entities is effective immediately.
- The changes to the codified SEC guidance on leases and revenue are effective upon adoption of these new standards, as applicable.
- Codifies the SEC Observer comment at the July 20, 2017 EITF meeting announcing that the SEC staff will not object if entities that are considered public business entities solely because their financial statements or summarized financial information are included in an SEC filing follow the adoption dates for ‘other entities’ when adopting the new revenue and leases standards
- Rescinds certain SEC Observer comments on accounting for management fees based on a formula that are codified in FASB ASC 605 (old revenue standard)
- Incorporates the SEC Observer comments on the effect of a change in tax law on leveraged leases from FASB ASC 840 into FASB ASC 842
- Rescinds other SEC staff announcements and Observer comments from the lease guidance