FASB Delays – Blake Miller, CPA, CFE
With Accounting Standards Update (ASU) 2019-10, the FASB has effectively delayed three standards from their original implementation date. These standards with new effective dates are:
- ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU provides transitions from an incurred loss model to an expected loss model on financial assets not already accounted for at fair value. This standard is now effective for fiscal years beginning after December 15, 2022 for non-public companies. Since this ASU has been delayed, implementation of ASU 2017-04, Simplifying the Test for Goodwill Impairment has also been delayed. ASU 2017-04 eliminates the need to compare the implied value of goodwill with the carrying value of goodwill in an impairment test.
- ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU expands eligible hedging strategies, enhances the transparency, comparability, and understandability of how hedging results are presented and disclosed, provides partial relief on the timing of certain aspects of hedging documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings. This standard is now effective for fiscal years beginning after December 15, 2020 for non-public companies.
- ASU 2016-02, Leases. This ASU has companies setting up operating lease agreements on the balance sheet as a Right of Use Asset and Right of Use Liability. This standard is now effective for fiscal years beginning after December 15, 2020 for non-public companies.
Each of these updates will still allow early adoption of the respective standard.