Private companies now have until 2021 to follow the new lease accounting rules that public companies adopted earlier this year.
The Financial Accounting Standards Board (“FASB”) voted July 17th to give privately held companies additional time due to the complexities of the lease accounting standards changes as well as being on the heels of the revenue recognition major changes. The FASB new rules on lease accounting standards resulted in multiple changes on how companies report leased assets and liabilities and these changes are particularly cumbersome for privately held companies. The year reprieve should not be viewed as a time to postpone getting started in prepping for implementation or giving an excuse to put on hold current progress in this process if you have already begun to implement, rather it should highlight the complexity and work needed to reach compliance.
This is a tentative decision, pending comments, but is not expected to receive much opposition.
There is a comment period of 30 days which allows practitioners and users of financial statements to comment on the deferment. Overturning this decision is not expected.