The votes are in. The Financial Accounting Standards Board (FASB) has unanimously decided to delay the accounting standard ASC 842. In a nutshell, ASC 842 is the lease accounting standard that requires organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Yes, you are correct. There is more to this standard than what is written here. This post is not about the standard, but more so about the delay of it. Read on.
Since 2006, both the FASB and the International Accounting Standards Board (IASB) have been working together to improve lease accounting and the reporting of leasing activity. Initially, ASC 842 was scheduled to take effect for public companies (fiscal years and interim periods) beginning after December 15, 2018 and for all other organizations beginning after December 15, 2019. However, as the effective dates approached closer and closer, organizations began to realize the complexity of implementing the new standard and the disruption it would cause within the organizations. Additionally, organizations were just unprepared to adopt the new standard. Several groups, including the AICPA requested the FASB to delay the standard to give organizations more time to prepare.
Subject to comments received from the exposure draft (which has a 30 day comment period), the FASB has decided to delay ASC 842 for one additional year. This would effect public, privately held companies, nonprofits, and small companies. The new effective date for non-public entities will be January 1, 2021.