New Accounting Standards Relieve Private Companies
On October 16, 2019, the Financial Accounting Standards Board (FASB), the board that sets the U.S. generally accepted accounting principles, voted to delay the effective date for the following significant accounting standards:
Accounting Standards Update No. 2016-02, Leases (Topic 842) (Leases)
This new standard requires most leased property to be carried on a company’s balance sheet as either a right of use asset or a capital asset, depending on the terms of the lease. Prior to this new standard, operating leases were not reflected on the balance sheet.
Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Credit Losses)
This new standard requires that credit losses be based on expected credit losses over the contractual term of the financial asset, rather than when such losses are probable. In most cases, credit losses will be recognized earlier than in the past.