The FASB held a special meeting on April 8th to discuss pervasive accounting issues arising from the coronavirus (COVID-19) pandemic. In this meeting, they voted to issue a proposal to defer the effective dates for the Lease standard (Topic 842) for private companies from 2021 to 2022. Although the vote has not been finalized, we expect this will likely be passed, resulting in the second delay in effective dates for this standard in a matter of months.
Topic 842 requires lessees to recognize all leases, including operating leases, with a term greater than 12 months on the balance sheet. In addition, lessees will disclose key information about their leasing transactions. Depending on the number of leases, leasing softwares may be necessary to ensure all leases are captured and the appropriate data is collected. A second delay would allow more time for companies to research these items and prepare for the effects of the new standard, as several companies are experiencing strained resources and limited time in our current situation.
Please feel free to contact us with any questions.