FASB Delays Effective Date of the New Lease Accounting Standard

On October 16, 2019, the Financial Accounting Standards Board voted to formally delay the effective dates of its new lease accounting standard for privately held companies, not-for-profits and small public companies to give them more time to implement the new rules.  Previously, the new lease accounting standard was due to be effective for these entities for fiscal years beginning after December 15, 2019.  The new 12-month deferral will be effective for fiscal years beginning after December 15, 2020.  For calendar year-end entities, this would be years ending December 31, 2021.

The lease standard remains effective for large publicly held companies as of January 1,  2019.  “The delay of the effective date for the lease standard is a welcome change for many privately held companies.  The additional 12-months will enable these companies to ‘learn’ from the implementations at the larger public companies and their public filings will provide examples of financial statement disclosures.” – Noel Swartz, VP of Assurance Services for JPS.

While this new lease accounting standard only relates to financial reporting under generally accepted accounting standards, for tax purposes, the impact of changes made to the books will need to be evaluated to ensure proper tax treatment.

If you’re unsure how this may effect your business contact JPS.