The Financial Accounting Standards Board has voted to defer the effective date of the revenue recognition standard for one year.

FASB voted Thursday to approve a one-year deferral of the effective date of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. Early adoption is permitted. The standard was originally set to take effect for public companies for financial reporting periods starting next December. However, many companies had complained that it would take them more time to adjust to the complex rules in the new standard. A joint Transition Resource Group set up by FASB and the International Accounting Standards Board has also requested more guidance on implementation of certain facets of the new standard, such as performance obligations and licensing.

Instead, FASB affirmed a proposal to defer the effective date of the new revenue standard for all entities by one year (see FASB Proposes Deferral of Revenue Recognition Standard). As a result, public business entities, certain not-for-profit entities, and certain employee benefit plans will apply the new revenue standard to annual reporting periods beginning after Dec. 15, 2017. All other entities will apply the new revenue standard to annual reporting periods beginning after Dec. 15, 2018.

Public business entities, certain not-for-profit entities, and certain employee benefit plans will apply the new revenue standard to interim reporting periods within annual reporting periods beginning after Dec. 15, 2017 (that is, beginning in the first interim period within the year of adoption).

All other entities will apply the new revenue standard to interim reporting periods within annual reporting periods beginning after December 15, 2019 (that is, all other entities will not be required to apply the guidance in the new revenue standard in interim periods within the year of adoption).

FASB expects to issue its final Accounting Standards Update formally amending the effective date by the end of the third quarter of 2015.

The International Accounting Standards Board has also proposed a deferral of the revenue recognition standard for one year. The IASB wants to stay in sync with FASB on the converged standard that the two boards released last year after more than a decade of working on harmonizing their standards.

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