FASB Votes to Defer Effective Date of Revenue Recognition Standard
On May 20, 2020, the FASB voted to issue a proposal to defer the effective date of the revenue recognition standard (primarily codified in FASB Accounting Standards Codification (FASB ASC) 606, Revenue from Contracts with Customers) for private companies and private not-for-profit entities (NFPs) that have not yet issued financial statements or made those financial statements available for issuance. The FASB made this decision to provide a measure of relief to certain companies and organizations focused on the COVID-19 pandemic.
For private companies and NFPs, the effective date of FASB ASC 606 would be deferred by one year for annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. The proposed effective date deferral would be optional for private companies and private NFPs.
Deferral Not Official Until Final Standard Issued
The effective date deferral of FASB ASC 606 is not official U.S. Generally Accepted Accounting Principles (U.S. GAAP) until the FASB issues a final standard adopting the deferral. Accordingly, if FASB ASC 606 is presently effective, U.S. GAAP financial statements that are issued or are available to be issued before the official deferral of FASB ASC 606 still would be required to incorporate FASB ASC 606 or be considered to contain a U.S. GAAP departure.
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