On June 3, 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842), that delayed the effective dates of Topic 606 and Topic 842 for one year. The decision resulted from feedback provided to the FASB related to challenges stemming from the COVID-19 pandemic.
Private companies have been focused on business survival during the pandemic and performing routine financial accounting tasks has proved difficult in the remote work environment. As a result, private companies may not have the resources to effectively implement the standards.
ASU 2020-05 permits private companies that have not yet issued their financial statements or made their financial statements available for issuance as of June 3, 2020 to adopt Topic 606 for annual reporting periods beginning after December 15, 2019, and interim reporting periods with annual reporting periods beginning after December 15, 2020.
ASU 2020-05 permits private companies to adopt Topic 842 for annual reporting periods beginning after December 15, 2021, and interim reporting periods with annual reporting periods beginning after December 15, 2022.
Geoff Braun, CPA, is Director in Moore Colson’s Business Assurance Practice. Geoff leads audit and assurance engagements primarily within the manufacturing, distribution and transportation industries.