At its July 17, 2019, meeting, the FASB discussed (1) reference rate reform; (2) effective date considerations for private companies, not-for-profit organizations, and small public companies; (3) the lessor’s accounting for operating lease receivables under ASC 842, Leases; and (4) implementation of the contract combination guidance in ASC 606, Revenue From Contracts With Customers, by colleges and universities.
Reference Rate Reform
The Board made tentative decisions about reference rate reform, specifically facilitation of the effects of the transition away from interbank offered rates to alternative reference rates. Specific topics discussed included (1) hedge accounting relief related to the effects of reference rate reform and (2) the transition method, disclosures, relief period, comment period, and cost-benefit analysis related to future proposed guidance on this subject. The Board directed its staff to begin drafting a proposed ASU for a vote by written ballot.
Effective Date Considerations for Private Companies, Not-for-Profit Organizations, and Small Public Companies
The Board tentatively decided to amend how the effective dates of major standards are staggered for certain entities, including private companies, not-for-profit organizations, and small public companies. Specifically, the FASB decided to give such entities implementation relief by delaying the effective dates of its standards on credit losses, derivatives and hedging, leases, and insurance for two years after the effective dates for SEC filers (excluding smaller reporting companies, as defined by the SEC). The Board directed its staff to begin drafting two proposed ASUs that incorporate its decisions on the effective dates: one for the credit losses, derivatives and hedging, and leasing standards and one for the insurance standard.
For more information, see Deloitte’s July 18, 2019, Heads Up as well as the meeting minutes on the FASB’s Web site.
Leasing Implementation Issue
The Board discussed the accounting for impairment of operating lease receivables and affirmed the FASB staff’s view that two methods of accounting for the impairment of operating lease receivables are acceptable.
Revenue Implementation Issue for Colleges and Universities
The Board discussed an implementation issue under ASC 606, Revenue From Contracts With Customers, with respect to the combination of tuition and housing contracts provided by colleges and universities.