Search the Financial Accounting Standards Board (FASB) website listed in the topic materials and identify a recently issued financial reporting standard

Prof. Ed,

In June of 2020, the FASB released an update that defers the implementation of two different updates from 2014 and 2016, respectively. This update defers the date of implementation of requirements for non-public business entities that have not adopted revenue recognition for a year (FASB, 2020). The reason for this is due to the COVID-19 pandemic affecting businesses. The second part of the update also defers the reporting of adopted leases for small private entities (FASB, 2020). By deferring the requirement to report adopted leases for a year, the FASB allows these small entities to recover from the disruptions of COVID-19.

For industries with franchises such as the restaurant industry and the automotive repair industry, the first half of the update provides additional time for franchisors. This additional time allows the franchisors to determine if any pre-opening activities provide revenue exist (FASB, 2020). This deferment allows franchisors within industries like the restaurant industry and automotive repair industry to learn the revenue recognition process for pre-opening and accurately report revenue. The latter half of the update regarding leases would allow private companies in the logistics industry to identify how to implement lease obligations in their financial reports (FASB, 2020). By deferring for one year, the FASB allows private companies to recover from changes in their leases due to the COVID-19 pandemic.

Timothy

References

Financial Accounting Standards Board. (2020, June 3). Accounting Standards Update No.

2020-05. Retrieved from FASB Accounting Standards Codification database