The Financial Accounting Standards Board issued for public comment Wednesday a proposed accounting standards update that would defer the effective date of its new revenue recognition standard by one year.
FASB is asking stakeholders are encouraged to review and provide comment on the proposal by May 29, 2015. The board members voted earlier this month to defer the standard for a year after hearing feedback from constituents that they would need more time to adjust to the new rules (see FASB Defers Revenue Recognition for 1 Year). FASB said at the time it would issue a proposal to elicit more feedback, but the deferral seems more certain now, especially as the proposal comes only a day after the International Accounting Standards Board issued its own proposal to defer the effective date of the converged standard for a year until Jan. 1, 2018 (see IASB to Defer Revenue Recognition Standard for a Year). The IASB said it wanted to stay aligned with FASB and because of proposed clarifications to the standard that are anticipated from FASB and the IASB's joint Transition Resource Group
Last year, FASB and the IASB issued a converged standard for revenue recognition after working on the project for over a year. It was originally set to take effect in late 2016 for companies using U.S. GAAP and early 2017 for companies using International Financial Reporting Standards.
FASB’s proposed ASU, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, would permit public organizations to apply the new revenue standard to annual reporting periods beginning after Dec. 15, 2017. Nonpublic organizations would be permitted to apply the new revenue standard to annual reporting periods beginning after Dec. 15, 2018.
FASB is proposing that public organizations would apply the new revenue standard to interim reporting periods within annual reporting periods beginning after Dec.15, 2017 (that is, a public organization would be required to apply the new revenue standard beginning in the first interim period within the year of adoption). Nonpublic organizations would apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2019 (that is, a nonpublic organization would not be required to apply the new revenue standard in interim periods within the year of adoption).
In addition, the proposed ASU would permit both public and nonpublic organizations to adopt the new revenue standard early, but not before the original public organization effective date (that is, annual periods beginning after Dec. 15, 2016).
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