Valuable Planning Time Extended
Last week, the FASB gave private companies a wonderful surprise. On Wednesday, July 17, the board proposed to delay the effective date of the new lease standard under FASB Codification 842 for one year. The effective date was to be for fiscal years beginning after December 15, 2019. This would have made the standard essentially effective for the 2020 calendar year. The proposal would make the new effective date for periods beginning after December 15, 2020.
While this is only a proposal at this time, there are only administrative issues before it becomes an actual update.
While most accountants are aware of this new standard, they have increasingly become aware of various implementation issues, including possible problems with financial ratios when trying to obtain financing. It was for this reason, the FASB decided to give private companies a little more time.
Therefore, to be prudent, practitioners should use this time wisely to explore the effects on their companies and their clients to see what needs to be done prior to 2021.
For obvious reasons, I will be emphasizing this topic in all my Western CPE Conference seminars this year. In addition, you can learn about this topic in my Webcast, Accounting For Leases: Understanding The New Standards in Webcasts: