FASB Issues Narrow-Scope Improvements to Credit Losses Standard
Norwalk, CT, November 15, 2018—The Financial Accounting Standards Board (FASB) today issued an Accounting Standards Update (ASU) that amends the transition requirements and scope of the credit losses standard issued in 2016.
“Since issuing the credit losses standard, the FASB staff has been working with stakeholders to address questions and obtain feedback on the guidance,” stated FASB Chairman Russell G. Golden. “Their input helped us develop the clarifications and improvements in the new ASU to ensure a smoother transition to the standard.”
First, the ASU mitigates transition complexity by requiring entities other than public business entities—including not-for-profit organizations and certain employee benefit plans—to implement it for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. This aligns the implementation date for their annual financial statements with the implementation date for their interim financial statements.
Second, the ASU clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard.
The effective date and transition requirements are the same as the effective dates and transition requirements in the credit losses standard, as amended by the new ASU. More information is available at www.fasb.org.
About the Financial Accounting Standards Board
Established in 1973, the FASB is the independent, private-sector, not-for-profit organization based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are recognized as authoritative by many other organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA). The FASB develops and issues financial accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to investors and others who use financial reports. The Financial Accounting Foundation (FAF) supports and oversees the FASB. For more information, visit www.fasb.org.