Defining Issues | May 2020

FASB discusses and responds to COVID-19

Updated: FASB votes to affirm and expand its proposal to defer the effective dates of the leases and revenue standards for certain entities as a result of COVID-19. 

Applicability

  • Forthcoming final ASU – All private companies (leases and revenue) and public not-for-profit entities (leases)
  • Proposed ASU – All private companies (leases), public not-for-profit entities (leases), private company franchisors (revenue)
  • Defining Issues – All companies 

Relevant dates

  • May 20, 2020 – FASB affirmed and expanded its proposal to defer the effective dates of the leases and revenue standards for certain entities and directed the staff to draft the final ASU
  • May 6, 2020 – Comments due on proposed ASU
  • April 21, 2020 – Proposed ASU, effective dates for certain entities issued
  • April 10, 2020 – FASB staff issues Q&A on accounting for COVID-19-related lease concessions

Leases

Calendar year-end private entities
 

Previous effective date

New effective date

Annual periods

January 1, 2021

January 1, 2022

Interim periods

January 1, 2022

January 1, 2023

Calendar year-end public not-for-profits
 

Previous effective date

New effective date

Annual periods

January 1, 2019

January 1, 2020

 

Revenue from contracts with customers

Calendar year-end private entities
 

Previous effective date

New effective date

Annual periods

January 1, 2019

January 1, 2020

Interim periods

January 1, 2020

January 1, 2021

 

Key impacts

Latest: On May 20, 2020 the FASB affirmed its proposal to defer the effective dates of the leases and revenue standards for certain entities, and directed the staff to draft the final ASU. 

Additionally, the FASB:

  • expanded the deferral of the revenue standard (ASC 606) to all private entities that have not already issued (or made available for issuance) financial statements thereunder; and
  • discussed entities’ disclosures around government assistance received in response to COVID-19.

 

On April 21, 2020 the FASB issued a proposed ASU, formally proposing the effective date deferrals of the new revenue standard and the new leases standard for certain entities (outlined below). 
 


 

The FASB met on April 8, 2020 to discuss accounting issues arising from the COVID-19 outbreak. 

  • The FASB tentatively decided to defer for one year the mandatory effective dates of:
    • ­the new leases standard (ASC 842) for private companies and public not-for-profit entities; and
    • ­ASC 606 for private company franchisors that have not already issued (made available for issuance) their financial statements under ASC 606.
  • The FASB indicated it will continue to monitor the need for changes to mandatory effective dates of other new standards for which those dates are not in the near term, as well as the ‘sunset date’ of the reference rate reform standard.
  • The FASB discussed technical inquiries the FASB staff has received related to the COVID-19 outbreak, including those related to lease rent concessions, interest income recognition on loans with payment holidays and cash flow hedging relationships discontinued as a result of the COVID-19 outbreak.

Report contents

  • Applicability
  • Key facts and impacts
  • Deferral of new accounting standards
  • COVID-19 technical inquiries
  • Other standard-setting activities
  • Next steps


Spotlight on contributors

Scott Muir

Scott Muir

Partner, Dept. of Professional Practice, KPMG US

Kevin Manson

Kevin Manson

Senior Manager, Dept. of Professional Practice, KPMG US

Mamta Soni

Mamta Soni

Senior Manager, Dept. of Professional Practice, KPMG US

 

 

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