FASB Proposes to Delay Effective Date of New Lease Accounting Standard
The Financial Accounting Standards Board (FASB) recently voted to propose delaying the effective date of the new lease standard from January 2020 to January 2021 for private companies and nonprofits. Under current accounting rules, entities are not required to recognize assets and liabilities related to operating leases. The new lease standard generally requires that all leases are capitalized on the balance sheet.
This decision to delay the effective date came as a result of the FASB concluding that it would be beneficial to have a two-year gap after public companies are required to implement major accounting standards, so that smaller private companies and nonprofits can learn from their efforts. Additionally, the FASB reconsidered the effective date given the burden of the time required to educate financial reporting staff and their limited availability to gather lease agreements and extract the data necessary to perform the new accounting.
The FASB will publish an exposure draft to solicit comment from accounting firms, industry associations, and others before the proposal becomes final.
For assistance on the adoption of the new lease standard, please contact us.